Bitcoin (BTC) and altcoin traders are more nervous than ever in over a year as a classic sentiment meter signals that “fear” is driving the market.
According to the Crypto Fear & Greed Index, cryptocurrency traders have not had such cold feet about the market climate since April 2020.
March 2020 to repeat
Fear & Greed uses a basket of factors to determine the overall sentiment among market participants – and thus where the market itself is likely to go.
Price volatility can lead to significant shifts in the measured values. Just four days ago, on May 10th, the index was 72/100, which means that “greed” is at the center of the mood.
Fast forward to Friday and a completely different picture emerges after Tesla rejected Bitcoin for alleged environmental damage and Binance caught the attention of regulators. At the time of writing, Fear & Greed only measured 26/100 – firmly within the “fear” zone and bordering on “extreme fear”.
The last time the index was this low was just weeks after the asset crash that brought BTC / USD to $ 3,600.
As Cointelegraph reported this time, however, Bitcoin appears to have weathered the storm and is holding up “very well” against an onslaught of sellers and dealer liquidations.
“If the stock market can fend off a global pandemic, Bitcoin can safely survive a tweet,” summed up popular trader Scott Melker.
Bitcoin is striving to get back to business as usual.
Analysts have already highlighted signs of a rebound in Bitcoin, while certain large-cap altcoins have managed to avoid the decline altogether.
“The Elon Dump is now recovering,” said statistician Willy Woo to Twitter followers on Thursday.
Woo highlighted the inflows to exchanges that turned into outflows as traders likely either bought the dip or bought it back after it was sold.
At the same time, the stable, stable coin balances continue their own upward trend and offer enormous liquidity potential if a bullish phase should re-enter the crypto markets.
Rafael Schultze-Kraft, co-founder of on-chain analytics resource Glassnode, also noted that funding rates had returned to their pre-slump behavior.
“That happened quickly: The financing rates fell positively again. Longs pay shorts again,” he commented on an accompanying graphic.