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Bitcoin Fear & Greed Index Reaches Lowest Level In Three Months, Is The Bleed Over?

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Amid the current market turmoil, the Bitcoin Fear & Greed Index has continued on a sharp decline. This decline has seen the index fall to its lowest level in over three months as crypto investors become more fearful and hold their investments from the market.

Bitcoin Fear & Greed Index Takes A Nosedive

In the months leading up to the end of the year 2023, the Bitcoin Fear & Greed Index climbed steadily until it reached high greed levels. Now, this index takes a number of factors into consideration to place investor sentiment across a number of categories ranging from Extreme Fear, Fear, Neutral, Greed, and Extreme Greed.

The Fear & Greed Index represents investor sentiment using scores between 1 and 100, with the lower end of the score representing fear levels and the higher ends representing greed. A score between 1 and 25 puts investor sentiment in Extreme Fear, 26-46 is Fear, 47-52 is Neutral, 53-75 is Greed, and 76-100 is Extreme Greed.

In 2023, the score climbed as high as 74 as Bitcoin rallied toward $50,000. However, as the market has retraced, so has investor sentiment, which is currently trending toward fear. At the time of writing, the Bitcoin Fear & Greed Index is showing a score of 58, which puts it in Neutral territory. It is also two scores down from the previous day’s figures of 50 which means that investor sentiment is trending more toward fear than greed.

Bitcoin Fear & Greed Index

Source: alternative.me

The current figure is the lowest that the index has been since October 2023. The last time the Bitcoin Fear & Greed Index fell below 48 was on October 17 2023. In cases like these, it shows that investors are less inclined to put money into the market. This causes demand to fall, and as a result, prices of assets across the space suffer for it.

Bitcoin price chart from Tradingview.com (Fear & Greed Index)

BTC price begins to show strength | Source: BTCUSD On Tradingview.com

When Will The Bleed Stop?

So far, the decline in the Bitcoin price has been triggered by massive outflows from the Grayscale Bitcoin Trust (GBTC) as investors redeemed their shares. Over $2 billion in BTC has flowed out from the fund, and this has put a lot of selling pressure on the asset.

However, as the week progresses, the outflows are expected to slow down as investors stop selling. In such a case, the demand would be all to catch up with the supply being dumped on the market, thereby giving Bitcoin and other assets a chance to recover.

At the time of writing, the Bitcoin price is still trending around $40,000 after a bounce back from a dip to $38,500. The price is up 2.6% in the last week, according to data from Coinmarketcap.

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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