BTC Price Weakens, Fear and Greed Index Drops to Lowest Level
BTC Price Weakens, Fear and Greed Index Drops to Lowest Level
Crypto traders currently seem reluctant to enter the weakening market after Bitcoin's price failed to drop below $60,000, with potential declines to $50,000.
According to data from Alternative.me, the Bitcoin Fear & Greed Index reached 27 on July 9, 2024. As of the writing of this article (July 10, 2024), the Bitcoin Fear & Greed Index has only increased by one point to 28, still reflecting high fear among traders.
The last time negative sentiment towards the crypto market was at this level was in early January 2023, when Bitcoin traded at $16,500, pushing the Fear & Greed Index down to 26. This decline was largely triggered by the collapse of FTX in November 2022.
Two Main Factors Causing Fear in the Crypto Market
Currently, the crypto market is experiencing panic due to two main factors. First, a large-scale Bitcoin sell-off by the German government without a clear reason. According to data from Arkham Intelligence, the government has sold over 26,036 Bitcoin, leaving only 23,964 BTC from the total of 50,000 BTC. Second, the Mt. Gox exchange announced it has started compensating creditors, which may trigger potential sales by their creditors. The bankrupt Japanese exchange is returning assets worth around $9 billion to affected creditors, with $8.2 billion of that amount in Bitcoin.
As a result of this situation, Bitcoin's price fell from $60,000 at the end of June to $53,000 on July 5. However, the price has since recovered and is currently around $58,500.
Investors Take Advantage of Price Drop to Invest in Bitcoin
Despite the recent market downturn creating significant concern, whales and institutional investors still see opportunities and are utilizing the buy-the-dip strategy by accumulating Bitcoin during the price drop. Data from Farside Investors shows that weekly inflows into Bitcoin ETFs reached $295 million on July 8, marking the largest record in the past month.
Meanwhile, data from CryptoQuant indicates that the amount of Bitcoin reserves held on exchanges continues to decline and is currently at its lowest level in the past two years, with total reserves of 2.8 million BTC. This decline could indicate a positive sign, as it is expected to balance the existing selling pressure.
conclusion
the current state of the crypto market, particularly Bitcoin, is characterized by significant fear and uncertainty among traders. The Bitcoin Fear & Greed Index's low levels reflect this sentiment, driven by substantial sell-offs from the German government and compensation payments from Mt. Gox. These events have contributed to a notable decline in Bitcoin's price, although there has been some recovery.
Despite the prevailing negative sentiment, there are signs of optimism as whales and institutional investors capitalize on the lower prices to accumulate Bitcoin. The record inflows into Bitcoin ETFs and the continued decrease in Bitcoin reserves on exchanges suggest a strategic accumulation, potentially stabilizing the market. This activity indicates that, while short-term fear persists, there is confidence in Bitcoin's long-term value and potential for recovery.
Read too : Analysts Predict Ethereum Will Outperform Bitcoin: Here’s Why!
*Disclaimer:
This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.
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