The crypto fear and greed index has reached its lowest level in over a year as it predicts “extreme fear” within the market.
According to the indicator, which is updated daily to determine market sentiment related to fear and greed, the index currently believes that market sentiment is sitting at 20.
The index rates a value from zero to 100, where a value of zero means “Extreme Fear” while a value of 100 represents “Extreme Greed.”
The fear and greed index works by analyzing emotions and sentiments from different sources, creating a simple number.
Currently the index utilizes volatility, market momentum coupled with volume, social media, dominance and trends to determine the score.
Fear at yearly high
The latest number indicates that the market sentiment is extremely fearful. Reading a number of 20. The index has not rated so low on the index since April 2020. Making the recent grading a new yearly low in the market.
Following the dramatic price drop BTC experienced in March 2020, when the price sank 50% over a period of two days, the fear and greed index reached single digits, totalling eight on the indicator.
The new yearly low comes just one week after the index scored 73, otherwise called “greed”. The last month has seen “extreme greed.” However the index now believes the market is fearful of what might occur in the future. This score is rationalized as “a sign that investors are too worried. That could be a buying opportunity” the website explains.
BTC dominance and price climbing
Regardless of the fear and greed index, BTC has rebounded in price following a volatile week that has seen the price drop consecutively for seven straight days. BTC has dropped from $59,600 to $46,400 on Sunday. A $13,200 price reduction within one week.
However BTC appears to be stabilizing as the price and dominance saw gains on Sunday. With BTC climbing 4.45%, and dominance up 0.44% at the time of writing.
Outliers affecting the market
The rapid decrease in the fear and greed index comes during a week when Tesla CEO Elon Musk announced that Tesla would stop accepting BTC as a payment option. Citing energy consumption concerns related to BTC mining.
Musk also played a role in the popular crypto Dogecoin (DOGE) reaching a new all-time high ahead of the billionaire’s Saturday Night Live performance. However the price swiftly corrected nearly 50% following the aired show.
While Musk still backs DOGE, crypto pioneers have spoken out about the Tesla CEO’s comments on BTC. Changpeng Zhao, Michael Saylor, and Ari Paul have all spoken against Musk’s criticisms related to BTC.