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The Concern and Greed Index fell to 11 on Could 9 after the newest crypto market sell-off, representing a 7-point drop from Could 8 and putting sentiment firmly inside ‘excessive concern’ territory.
The Concern and Greed Index is compiled utilizing 5 sorts of knowledge sources with various levels of weighting. Volatility and market momentum/quantity make up essentially the most vital weightings, at 25% every. However different knowledge sources embody social media, surveys, Bitcoin (BTC) dominance, and developments.
The market sentiment displays the general perspective or feeling in direction of a specific asset or monetary market. As sentiment influences technical indicators, merchants and analysts can use it to gauge short-term value actions.
With the vast majority of 2022 spent transferring between concern and excessive concern, is it now time to simply accept the bear market is right here?
Brace for a downturn
January 23, 2022, was the final time crypto market sentiment was this low. This era was characterised by a normal hunch in macroeconomic sentiment purchased on by a slide in international shares.
4 months on, and the narrative stays the identical, if not worse, provided that the Fed has adopted via with speak of cooling the economic system by elevating charges twice this yr. The primary on March 16 and the final on Could 4.
With no signal of inflation coming beneath management, the Fed will possible proceed to lift charges, the upshot being much less liquidity out there. Extra so for dangerous property, together with cryptocurrencies.
Is crypto winter right here already?
Crypto winter refers to a chronic interval of falling costs. The earlier bear market started in early 2018, following Bitcoin’s spike to $20,000. After an 85% drop to backside at $3,100, the bear market resulted in December 2020 after re-reaching $20,000.
The market chief, Bitcoin, has been trending downwards since hitting its all-time excessive of $69,000 in early November 2021. The Crypto Lark factors out Bitcoin has closed its sixth weekly consecutive crimson candle, which has not occurred since 2014.
Value volatility has hinted on the chance that crypto winter is right here already. And virtually midway into 2022, it’s more and more tough to construct a bull case.
In a current tweet, Rekt Capital, though removed from calling this downturn a bear market, implied that additional drops could be on the playing cards.
You survived the -84.5% #BTC Bear Market
You survived the -63% $BTC crash in March 2020
You survived the -53% BTC crash in Could 2021
You will survive this crash as properly#Crypto #Bitcoin
— Rekt Capital (@rektcapital) May 8, 2022
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