Bitcoin Fear and Greed Index Retreats to “Extreme Fear” Zone
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Answer Bitcoin Fear and Greed Index Retreats to “Extreme Fear” Zone
Bitcoin fell 2.91% on Friday, after reversing its 1.28% gain from Thursday, and the cryptocurrency ended its trading on Saturday at $38,594.
The pullback, which occurred on Friday, sent Bitcoin down 15.2% in the last session of April.
According to Bloomberg, negative sentiment extended from the US stock markets to the cryptocurrency market, with Bitcoin’s increased correlation with Nasdaq in April.
The fear and greed index for “Bitcoin” declined
The “Fear and Greed Index” decreased from 23/100 to 20/100, yesterday morning, and the index remained within the “extreme fear” area.
The index reached its highest level of the month at 53/100 on April 05, which coincided with the arrival of Bitcoin at the levels of $47,000, before falling to its lowest level in the month at $37,727.
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The “fear” and “extreme fear” areas reflect investors’ expectations of a further deterioration in cryptocurrency prices.
The index will need to return to 46/100 to present the April high of $47,433, for the Bitcoin bulls.
How does the fear and greed indicator work in the cryptocurrency market?
When the “Fear and Greedy Index” in the cryptocurrency market approaches “extreme greed” this means that long positions are getting greedy and the market is late in making a correction.
Similarly, when the “Fear and Greed Index” in the cryptocurrency market is at “extreme fear” it means that traders are very afraid and this may cause a trend reversal.
The cryptocurrency market has an emotional behavior, which means that traders tend to get greedy when the market goes up, which leads to the fear of losing.
On the other hand, people often sell their cryptocurrency in an irrational reaction to seeing the red numbers on the “Fear and Greed Index.”
The indicator works as follows:
0 – 24 = intense fear
25-49 = Fear
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50 – 74 = greed
75 – 100 = extreme greed
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