ancora paura sul mercato crypto

The Fear and Greed Index, a well-known tool for analyzing sentiment among crypto investors, shows that there is still a strong smell of fear in the air.

The situation had slightly improved at the end of August, when Bitcoin attempted in vain to break through the 65,000 dollars, only to turn gloomy again in September.

Now everything depends on the next movements of the king of the crypto market, with the results that will likely establish the direction of prices until the end of the year.

Let’s see everything in detail below.

The Fear and Greed Index signals fear among crypto investors

Analyzing the latest data from the Fear and Greed Index, we easily notice that fear still represents the most representative emotion of the crypto market situation.

The indicator, which expresses an estimate of the sentiment among investors with a number between 0 and 100, now points the needle to 26.

As shown in the figure, at this level there is a tendency to observe with fear the evolution of the prices of crypto assets.

Usually, after a general market dump, the Fear and Greed Index drops rapidly, while after a pump it rises into the greed zone.

In the last week, the instrument has been almost stationary in the fear zone, without however dropping to the levels of so-called “extreme fear”.

Last month the situation was slightly more neutral in the 40 zone, where fear still represents the dominant sentiment although expressed with more lightness.

The evaluation of the Fear and Greed Index is fundamental in order to basically understand what the most widespread feeling among the various market participants is.

Without a minimum of sentiment analysis, we cannot understand if the crypto assets are priced correctly or if there is a trend driving the trades.

The basic assumption is that the behavior of crypto traders is strongly emotional and driven by the irrationality of investment choices. 

In general, in fact, when the instrument signals fear there is a buying opportunity in the market while when it signals greed there could be an imminent correction.

In any case, it is important to emphasize that this indicator alone is absolutely not sufficient to evaluate a  forthcoming bull or bear market.

Ideally, to complete a price analysis, it would be appropriate to also integrate technical analysis, analysis of macroeconomic data, and sometimes even on-chain metrics.

The volatility of the Fear and Greed Index: analysis of historical data on market sentiment

Even though the crypto Fear and Greed Index is currently pointed at the fear level, it does not necessarily mean that this situation has to last long.

The indicator, just like the price trend of the market, is highly volatile and changes by numerous points suddenly.

Just observe the data from the last 3 months to realize how the sentiment of the crypto sector is at the mercy of unpredictable movements.

In mid-June, we were in the midst of optimism at 71 points after the month of May had been accompanied by a slight general increase.

After a month the picture had completely changed for the worse, with Bitcoin entering a marked retracement phase.

On July 13, the instrument highlighted extreme fear at level 25, while just 7 days later it was resurrected in the greed zone at 74 points.

In that juncture Bitcoin went from a quotation of 58,000 dollars to 68,000 dollars, with a leg up that brought confidence among crypto analysts.

Not even two weeks later, however, the Fear and Greed Index returned to indicate maximum fear with a score of 17 that had not been seen for over a year.

From the most extreme terror the situation returned to neutrality in 3 days, while Bitcoin was recovering from the dip of 49,000.

It is clear therefore that it takes very little to overturn the sentiment analysis and switch from greed to fear, or vice versa.

Everything depends on the speed and intensity of speculative movements in the crypto sector, which as we know can hardly be predicted.

Bitcoin: the next movements will be decisive for the entire crypto sector

While the Fear and Greed Index indicates a moment of fear for the crypto market, the next moves of Bitcoin could mark a change in perspective.

On a weekly time frame, the cryptocurrency is approaching the 50-period exponential moving average, where there is an opportunity for a rebound.

The last time the crypto had retraced heavily after breaking the all-time highs and returning to the EMA 50, we observed a subsequent bull leg up.

Let’s talk about the price action in July 2021, when BTC briefly touched $30,000 before rebounding to the top of $69,000 in November.

In that case, the sentiment jumped from extreme fear to extreme greed in a short time, even though we all know what happened in the following months.

Now Bitcoin is around 55,000 dollars, waiting to choose the graphic destiny of the rest of the market for the next 3-4 months.

If the benchmark of the crypto sector falls below 50,000 dollars going under the spike reached in August, we could expect more months of bear market.

If instead, as happened in the past, it will bounce back from the current values returning  above 65,000 dollars, we could celebrate a return to the bull market.

The bullish confirmation would occur with a decisive break of the resistance at 70,000 dollars, while for the bearish one we should wait for the break of the cluster at 40,000 dollars.

Maximum attention during the next week, when on September 18th the FED will express itself on the issue of interest rate cuts in the USA.

That event could lead to a movement that will likely move the Fear and Greed Index significantly.

The fear could remain just a mirage in a few days if the bulls return to call the shots in the crypto industry.

It is important to emphasize that in the coming weeks, great volatility is expected both downward and upward. Do not be fooled by false movements and do not be afraid of the roller coasters.