The cryptocurrency sector has entered a state of “extreme fear,” according to the Bitcoin Fear and Greed Index dives, as the price of Bitcoin dropped to $54,653.
The recent decline has pushed the total market capitalization below the $2 trillion mark. The Bitcoin Fear & Greed Index, a widely used measure of market sentiment, fell to 22, reflecting heightened anxiety among investors.
The last time such levels of fear were seen was in 2022, when BTC dropped below $18,000 following the collapse of the FTX exchange.
Bitcoin Fear and Greed Index | Source: Alternative.me
Meanwhile, recent data shows that a group of investors that have held Bitcoin for shorter periods have offloaded over 642,366 BTC, valued at $36.65 billion, into the market since mid-August. This selloff (combined with the Bitcoin Fear and Greed Index) has contributed to the current bearish market conditions.
Concerns are now growing that BTC could face a September correction, potentially dropping below $50,000 — the psychologically critical level. Nevertheless, institutional interest in BTC continues to grow.
Morgan Stanley recently disclosed that it had increased its Bitcoin exposure through its Institutional Fund, with a 2.1% allocation to BlackRock’s spot Bitcoin ETF, IBIT.
Despite the current market downturn and the continued plunge in the Bitcoin Fear and Greed Index, some analysts remain bullish on Bitcoin’s prospects. MetaShackle, a TradingView analyst, recently identified a bullish cup and handle pattern forming in BTC’s chart.
According to the analyst, this formation is unprecedented in crypto’s history and could signal a significant rally in the cryptocurrency’s price in the near future. Cup and handle patterns, known for their bullish implications, occur when a price recovers after a downward trend to form a “u” shape, followed by a smaller dip, forming the handle.
These patterns are considered strong indicators of potential price growth. Moreover, Lark Davis, a prominent crypto investor, believes the coming months could prove pivotal for BTC.
He cited historical trends in the fourth quarter and the potential for a US Federal Reserve rate cut as key catalysts for a recovery. Davis also pointed to the upcoming US election as a factor that could further boost BTC’s price, particularly if former President Donald Trump, who has shown support for cryptocurrency, returns to office.
Crypto Fear and Greed index has dropped to 22.
The crypto market is full of fear.
People are overlooking the fact that:
– Q4 (typically bullish) is just around the corner
– M2 money supply is rising
– Rate cuts are on the horizon
– The US elections are just 60 days away. pic.twitter.com/pDctsh2tum— Lark Davis (@TheCryptoLark) September 6, 2024
While the market remains dominated by bearish sentiment, October is historically favorable for Bitcoin, often bringing more price gains.
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