Following a red weekend that sees BTC price continue to decline, the market sentiment has turned to “extreme fear”
The fear and greed index has hit its lowest rating, reaching a new yearly low. The indicator analyzes market sentiment through volatility and momentum in the market. The index also looks at volume, social media, dominance and trends to determine a single score for ease of use.
The index on Saturday hit a new yearly low of 12, followed by 14 on Sunday. The latest score indicates “extreme fear” in the market.
The recent rating comes following a terrible week in the market for cryptos. The score has dropped further from last week’s score of 20. With Bitcoin declining in price for two consecutive weeks, the score has seen a drop from last month’s score of 55, which indicated “greed” in the market.
Bearish market sentiment
The recent slump in BTC price has affected the entire crypto market, with altcoins suffering equally as badly.
The total market capitalization has declined by more than 45% since its all-time high of $2.57 trillion. Now sitting at $1.42 trillion. BTC saw a 26% decline in price over the last week, ultimately contributing to a decline in the fear and greed index. At time of writing, BTC was hovering around $33,400. Down 7% on the day alone.
Negative news a contributing factor
This week saw China announce measures to prevent financial institutions from participating in crypto services. The news had a negative effect on BTC as the price had already been impacted by Tesla’s decision to withdraw BTC as a payment method, citing environmental concerns related to the energy used for mining of bitcoin.
Furthermore, China also announced it would be cracking down on BTC mining within the country in an effort to reduce carbon emissions while protecting its current financial system.