A closer look at the fear and greed index results gives an insight into why Bitcoin may be struggling.
Data from the fear and greed index has shown that market sentiments have been moving between extreme fear and neutral for the last 7 days. It was a bullish week as Bitcoin rose to an intraday high of $44,837 before easing back. Bitcoin ended the day on March 4th at the $30,917 mark.
Bitcoin Index Stays Neutral Despite Bearish News
On Monday, the 28th of February, the fear and greed index hit the 20 mark largely due to news about the Russia-Ukraine conflict. The index surged to 51/100 on Tuesday morning pushing Bitcoin’s price above the $50k mark. The upsurge came despite the bearish sentiments across the crypto space. Throughout the week, the fear and greed index has moved between the 20 mark (extreme fear) and the 52 mark (neutral).
The fear and greed index generates a single value between 1 and 100. Number 1 suggests that the crypto market is experiencing extreme fear and 100 shows that the market is experiencing extreme greed. The index is influenced by volatility, market momentum, surveys, social media, dominance, and trends.
A typical rule is that when the index value reaches 1, it indicates a good time to buy. This is because people are hesitant to buy at this time. The price may fall as a result of individuals selling out their assets due to FUD.
On the other hand, if the index is at 100, it is considered “extreme greed”. Consider it as people rushing into a hot market at any cost in the hopes of profiting from spectacular growth. When prices increase swiftly, there’s a good probability they’ll reverse and fall just as quickly.
Fearful Sentiments Ease as Bitcoin Price Rises
Sentiments are often a good indicator to know the direction of the crypto market and how traders are reacting. Over the past month, the market has acted extremely fearful towards Bitcoin price.
The early days of February indicated the beginning of the bull run as crypto prices experienced an upward trend. Bitcoin rose to just below $45,000 as talks about inflation became rampant around social media.
As war broke in late February, prices dropped as the crypto community became fearful. More updates about the tension in Russia and Ukraine led to more FUD. February experienced the most negative week towards Bitcoin since October 2020.
In February, despite the FUD, traders have switched back to mild bullish trends toward Bitcoin. As crypto becomes the major means of fundraising for afflicted countries, sentiments towards Bitcoin are becoming positive.
Analysts suggest that Bitcoin may test a new support level at $39,000 after failing to break the $44,000 resistance mark. Several traders had hoped that the $40,000 mark would be a solid support zone after its latest run to $45,200. However, Bitcoin has failed to hold that support, sending it back to the middle of a range in which it had acted throughout 2022. However, traders are optimistic that Bitcoin can test new support levels within the next coming days.
What are your predictions for Bitcoin for March? Are we heading for a bull season? Let us know your thoughts in the comments below.
