Current BTC Fear Period Exceeds The 2021 BTC Bear Season – Arcane Research
Arcane Research’s latest weekly report shows that the current period of BTC fear has exceeded the BTC bearish season of last year as the crypto market remains in extreme fear.
BTC Fear And Greed Index Is In The Extreme Fear Region
The latest Arcane Research data shows that market bias among BTC investors is extreme fear. Arcane usually publishes weekly reports on market sentiments and predictions for the week ahead. The fear and greed index is one of the tools used to determine BTC bias’s bias for a particular week.
This index is graded 0-100, with fifty being the midpoint. Any index value below 50 indicates that the market is greedy, while any value above 50 indicates that the market is fearful. Index values above 75 indicate extreme fear, while below 25 indicate extreme greed. Over the years, it has been observed that the index value usually exceeds 75 during BTC’s top formations, while the index value hovers around 25 during BTC’s bottom formation.
The Contrarian Investment Practice
Hence, some BTC analysts opine that the ideal BTC buy period is when the index exceeds 75, while the ideal period to sell is when the index is below 25. This investment practice is the contrarian investment popularized by billionaire investor, Warren Buffet.
The chart below shows BTC’s fear and greed index within the last 12 months, and a close observation indicates that the index has been in an extreme fear region since last November, with only a few temporary spikes in between.
BTC Fear And Greed Chart. Source: Arcane’s Research
By comparison, the chart shows that this period of fear is longer than the May -July 2021 BTC bearish season. As of this writing, the index’s value is 22, which is still in the extreme fear region. The index’s value has also been in this region over the past seven days. Any believer in the contrarian investment principle would have started increasing their BTC holdings right now.
However, many investors need to remember that the ongoing Russia-Ukraine may be a major factor in why the crypto market has remained bearish. Hence, no one can predict when the index will be in the greed region since no one can predict when the war will be over.
Fed’s Interest Rates Tightening Negatively Affects BTC Price
Following confirmation that the Fed has increased interest rates for the first time in four years, BTC’s price retreated from its peak daily price. The Fed explained the increase in rates became necessary as the rising inflation rates became a major concern and Russia’s invasion of Ukraine was also another reason.
The Fed is convinced that the Russia-Ukraine war will cause an increase in inflation rates which will cause a decrease in GDP. Over the past six months, inflation rates have been going up, reaching a 40-year peak of 7.8% in late February 2022.
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