Data shows that Bitcoin sentiment turned neutral due to greed after the asset's latest drop to the $57,000 level.
Bitcoin Fear & Greed Index returned to neutral levels
THE “Fear and Greed Index» is an indicator created by Alternative this shows the average investor sentiment in the Bitcoin and broader cryptocurrency market.
This index estimates sentiment by taking into account five factors: volatility, trading volume, social media data, market cap dominance and Google Trends.
The metric uses a scale from zero to 100 to represent this average sentiment. Any values below 46 suggest investors are fearful, while those above 54 imply a hungry market. The zone between these two thresholds naturally corresponds to the territory of neutral mentality.
Now, here's what Bitcoin sentiment looks like right now, according to the Fear & Greed Index:
The value of the metric appears to be 54 at the moment | Source: Alternative
As noted above, the Bitcoin Fear & Greed Index is at a reading of 54, implying that investors currently share neutral sentiment. However, neutrality is only fair, as the metric sits right on the edge of the greed region.
This is a significant departure from yesterday's sentiment: 67. The chart below shows the recent change in the indicator's value.
The trend in the Fear & Greed Index over the past year | Source: Alternative
As the chart shows, the Bitcoin Fear & Greed Index has been declining recently. For most of February and March, as well as the first half of April, the indicator was in or near a special zone called extreme greed.
The market assumes this sentiment at values above 75. As asset prices have struggled recently, the mentality has calmed down from this extreme zone and entered the normal region of greed. With the latest BTC crash, the index saw a sharp fall, now exiting completely out of greed.
Historically, cryptocurrencies have tended to evolve against the expectations of the majority. The stronger this expectation, the higher the probability of such a contrary movement.
This expectation is considered strongest in areas of extreme feelings, as well as areas of extreme fear and greed. Thus, major troughs and peaks have often occurred in these territories.
THE record price (ATH) last month, which continues to be the peak of the rally thus far, also occurred alongside the outliers of the Bitcoin Fear & Greed Index.
With sentiment now back to neutral, some investors could be watching for a return to fear. This is natural, as a rebound would become more likely as sentiment currently worsens.
BTC Price
During Bitcoin's latest plunge, its price briefly fell below $57,000 before rallying back to $57,300.
Looks like the price of the asset has registered a sharp drop over the past two days | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, Alternative.me, chart by TradingView.com
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