Since a few weeks, the Crypto Fear and Greed Index has been indicating that bitcoin sentiment is in extreme fear. Despite bitcoin’s gains on Monday, the CFGI remains in “extreme fear” with a ranking score 16 out of 100.
Crypto Fear and Greed Index are still in ‘Extreme Fear.
45 days ago, the Crypto fear and greed index (CFGI) hit the “extreme fear range” with a score 22. On April 15, the 24-hour range of bitcoin prices was $39,823.77 to $40,709.11 per unit. Markets have fallen further and on May 12, BTC reached a low of $25,401. This was lower than the July 2017 bottom. Today, BTC would have risen more than 24% if someone bought it on May 12.
Despite the gains made over the past two weeks the CFGI remains in the “extreme Fear” zone. The ranking is also lower than on April 15. The CFGI ranking score at the time of writing is 16 out 100. However, this doesn’t mean that markets will remain gloomy. Alternative.me hosts the CFGI, which measures market sentiment. The website makes two simple assumptions.
Investors can become too anxious if they feel extreme fear. This could indicate a buying opportunity.
If investors are getting greedy it is time for a correction.
Extreme fear can lead to greater capitulation, and the so-called buying chance may be lower. One could also assume that the current timeframe is a tiered purchasing opportunity, and that people are happy to purchase BTC as the price drops. These assumptions of the CFGI are simple. They may be accepted as truths but may not come to fruition.
The CFGI also states that “investors get too greedy” does not necessarily mean crypto markets will improve. If someone followed this advice, they might be selling BTC at less than they would have earned by waiting. There’s also the old investment advice that there’s nothing wrong in taking profits along the journey.
According to the CFGI, crypto market sentiment has been in the “extreme Fear” zone for more than a month. Yesterday’s index tapped a ranking score 10 on May 30, which indicates that the latest CFGI score (16) is an improvement. Google Trends metrics for “bitcoin”, which is the query, show that interest in the query has increased from the Terra fiasco.
Google Trends data worldwide shows that bitcoin interest was low before the Terra LUNA/UST fallout. GT data shows that the search term bitcoin climbed to 100 GT scores in the week from May 8-14. This is the highest GT score since June 2021. However, the GT Data score for “bitcoin”, however, dropped by 45% in the week following the Terra LUNA/UST market carnage.