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The crypto market has been at odds since the price of bitcoin fell to $20,000. This remains an important technical level for the digital asset as it is just above the previous cycle peak. As such, investors in the space are watching with bated breath to see if bitcoin can sustain this level. This, in turn, has led to a decline in investor sentiment during this period, causing the Fear & Greed Index to bottom out.
Crypto index sits at 25
The Crypto Fear & Greed Index is an indicator that is based on a number of metrics to provide an overall score to reflect how investors feel towards the market. It ranks these into four categories, and currently investor sentiment falls into the lowest of these.
In its most recent update, the Fear & Greed index places the market in extreme fear territory with a score of 25. This is after the index hit its low of 20 in more than a month, signaling an increase in the positive sentiment in the last day.
However, the current score is not so good for the crypto market. With a sentiment like this, investors are wary of putting money into the market, creating panic and leaving the playing field to the sellers. This works to push the prices of digital assets in the space even further down.
Bitcoin struggles with $20,000
The $20,000 mark was one of the hardest levels to maintain for bitcoin. Volatility always seems to skyrocket when bitcoin is at this point, leading to erratic price movements. In this way, the digital asset continues to move above and below $20,000.
Nevertheless, bulls continue to fight at this level as there is no significant support below this level except near $17,600. The low of this cycle, which had plunged below the previous cycle peak, puts bitcoin in a dangerous position.
Historical data put bitcoin at least 80% lower than its all-time high before the bear market bottom. If the market follows this trend, $17,600 may not be the bottom for the market. Bitcoin is only about 70% lower than its all-time high. An 80% withdrawal would bring it around $15,000.
However, it is important to keep in mind that bitcoin has broken several historical trends during this cycle. An example is that the price has never fallen below the previous cycle peak, so an extension of this deviation could cause bitcoin to shrug off the expected 80% drop.
Featured image from CNBC, chart from TradingView.com
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