Following the Bitcoin crash to $42k, the fear and greed index has declined to extreme fear values not seen since July of last year.
As pointed out by an analyst in a CryptoQuant post, the BTC fear and greed index has dropped to very low values.
The “fear and greed index” is a crypto indicator that measures the general sentiment among investors in the market.
The index uses numbers to represent the sentiment on a numeric scale that goes from zero to hundred. Values of the indicator above fifty mean that the current holder sentiment is that of greed.
And values below 50 imply that the market is fearful at the moment. Index values below 25 and those above 75 fall into the “extreme” category, signifying extreme fear and extreme greed, respectively.
The indicator usually remains in the greed zone during bull runs. Extreme greed values have historically signaled that a correction in the price of Bitcoin may be near, and a top could form.
On the other hand, values of fear may be there during bearish trends, and extreme fear might imply that a bottom could soon form.
Incidentally, the day in July when such low values occurred was also around when the Bitcoin price bottomed out. However, the quant in the post notes that this doesn’t necessarily mean that the current price has hit a bottom as well.
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