Crypto fear & greed index hits ‘extreme fear’ – Is a market bottom forming?

The market has been range-bound for over two weeks, a setup that traditionally hints at some directional bias. That mentioned, issues are beginning to shift, leaving merchants questioning the place help would possibly lastly stabilize.

For the reason that late This autumn rally, Bitcoin [BTC] has been consolidating for greater than six weeks, bouncing between $85k and $90k. Whereas BTC did handle to rally previous $97k, the momentum didn’t final.

As an alternative, the following correction erased all of these features, and even worse, it couldn’t maintain its earlier vary. Liquidity unwind added stress, whereas the Worry and Greed Index saved merchants on edge, making the subsequent transfer much more unsure.

Supply: TradingView (BTC/USDT)

If Bitcoin follows this playbook, the subsequent significant transfer may come by the tip of March, assuming BTC can maintain above the $65k stage. Robust accumulation at this level would assist reinforce that stage as a strong backside.

That mentioned, conviction nonetheless appears to be like skinny. On-chain metrics present little signal of institutional curiosity, with BTC ETFs persevering with to see net outflows. The Coinbase Premium Index continues to be within the pink, signaling weak spot shopping for.

The larger image? The Worry and Greed Index tells the true story.

Worry and greed index highlights low threat urge for food

The Fear and Greed Index is a helpful metric for recognizing tops and bottoms.

Traditionally, market bottoms are likely to line up with the index dropping into ‘excessive concern,’ usually forcing capitulation. When the index begins creeping again up towards the concern zone, it could sign that sentiment is shifting.

On the flip aspect, market tops often coincide with the concern and greed index hitting greed or excessive greed ranges. That’s when euphoria round BTC peaks, merchants lock in income, and the market sees wholesome corrections.

Supply: CoinMarketCap

This time, although, issues regarded totally different. 

As Bitcoin reclaimed $97k, the index stayed caught within the impartial zone, displaying there wasn’t a lot aggressive accumulation on the prime. Bears stepped in, and bids weren’t robust sufficient to deal with the stress from the liquidity unwind, letting the market slip again.

From a psychology perspective, this reveals a transparent lack of threat urge for food amongst buyers, additional strengthened by weak dip shopping for. Wanting on the Worry and Greed Index, the market nonetheless leans bearish, with consolidation favoring the bears and momentum staying below stress.

Remaining Abstract

• Impartial readings on the Worry and Greed Index present weak accumulation and low threat urge for food, conserving momentum below stress.
• BTC failed to carry $97k as liquidity unwind added stress, leaving consolidation tilted in favor of the bears.