Bitcoin and the altcoin traders are quite nervous than any time in more than a year as a classic sentiment gauge now signals ‘fear’ is driving the crypto market. Based on the Crypto Fear & Greed Index, crypto traders have not had this amount of cold feet about the market climate since April 2021.
Trader sentiment is verging on ‘extreme fear’ as the Crypto Fear & Greed Index indicates some signs of the climate after the March 2021 cross-asset crash.
Is March 2021 On Repeat?
Fear & Greed uses a basket of factors to come up with the overriding sentiment among the market participants and, thus, where the general market is likely headed. Price volatility may produce significant shifts in its readings. Four days ago, the Index measured 72/100, which corresponds to ‘greed’ being at the center of sentiment.
Today, there is an entirely different picture after Tesla rejected Bitcoin for purported environmental damage and major exchange Binance seeing growing attention from regulators. At the time of publication, Fear & Greed measured just 26/100, which is strongly within the ‘fear’ zone and now bordering ‘extreme fear.’
The last time this Index was so low was a few weeks after the cross-asset crash that pushed Bitcoin down to $3,600. But according to various reports, this time around, bitcoin seems to have weathered the storm. It has performed ‘very well’ so far against an onslaught of sellers and trader liquidations.
Popular trader Scott Melker summarized:
Bitcoin Aims To Get Back To ‘Business As Usual
Analysts and commentators have already pointed to signs of a rebound setting in for Bitcoin. Several large-cap altcoins managed to avoid the dip as well. Statistician Willy Woo declared to Twitter followers on May 13:
“The Elon Dump now in recovery”
Woo mentioned the inflows to exchanges are turning to outflows as the traders seemingly bought the dip or bought back in after selling. Concurrently, stablecoin balances across the exchanges continue on their uptrend, offering massive potential liquidity should a bullish phase reenter crypto markets.
The co-founder of on-chain analytics resource Glassnode, Rafael Schultze-Kraft, also noted that the funding rates had changed back to their behavior from before the dip. He commented on an accompanying chart:
“That was quick: funding rates flipped positive again. Longs are back to paying shorts.”