The crypto fear and hunger index shows that the cryptocurrency market sentiment has shifted from “Extreme Greed” to “Fear”.
As Bitcoin (BTC) price drops below the $ 29,000 threshold, investor mood worsens, and the Crypto fear and hunger index also declines to October 2020 levels.
On January 22nd, the Crypto fear and hunger index dropped sharply to 40, shifting market sentiment from “Extreme Greed” to “Fear.” The index fell to this low for the first time since October 3, 2020, when Bitcoin was traded around $ 10,500.
Similar to the fear and greed indices in traditional markets, the Crypto fear and hunger index is a tool that measures the two main emotions that affect how investors are willing to buy crypto such as Bitcoin.
According to Alternative.me, excessive fear could be a sign that investors are very anxious, which could mean a good buying opportunity. On the contrary, when investors are too greedy, it could be a sign that the market needs a correction.
Indeed, before dropping to 40, the Crypto Fear and Greed Index rose to 95 on January 6, showing that investors were very greedy when they saw Bitcoin’s all-time high of $ 42,000 on January 8. Bitcoin price then saw a huge drop and the correction dropped to $ 28,750 on January 21st.
As Bitcoin has experienced a sharp correction in recent days, more and more people in the industry are commenting on price movements. On January 21, Scott Minerd, chief investment officer at financial services firm Guggenheim, predicted that Bitcoin would drop to $ 20,000. The manager believes that Bitcoin will reach $ 400,000 in the long run, but states that the rise will not happen this year.