- The crypto market sentiment displays extreme fear following prolonged underperformance periods.
- The crypto market cap witnessed a 63% rebound when the Fear & Greed Index displayed extreme fear readings last.
- The 2020 March market crash saw a 10 FGI reading, but the cryptocurrency space experienced a 264% recovery.
The crypto fear & greed index currently flashes ‘extreme fear’ in the markets as the digital coin marketplace struggles to reverse the underperformance period. Nevertheless, what is the crypto fear and greed index? It is a daily glance at the overall cryptocurrency market sentiment based on various factors, including volatility, trends, social media, market volume, and dominance.
Digital Coins Trading Beneath Intrinsic Value
The crypto FGI (Fear & Greed Index) targets to reveal whether market players are too bullish (greed) or bearish whenever the indicators flashes ‘fear’. The current ‘extreme fear’ market sentiment shows that cryptos are hovering beneath their respective intrinsic value.
When the market dips in an ‘extreme fear’ state, the assets’ price encounters pressure as market participants prefer selling because of panic. Nevertheless, other players utilize that as a lucrative opportunity to buy more digital coins at discounted prices.
With the relatively lower prices by digital coins and the FGI’s 24 reading, crypto analysts state that virtual currencies remain oversold, and a sharp rebound might follow soon.
Meanwhile, Crypto FGI hit its lowest reading in 2021 during the 21 July sessions when the index reached 10, showing a massive ear. Though the bearish attitude, the market noted a quick rebound, climbing from $1.189 trillion to $2.461 trillion, translating to a 107% surge.
Also, the crypto FGI touched extreme fear reading on 30 September 2021, flashing 20 indexes. That had the crypto market cap increasing from $1.832 trillion on 30 September to $3.001 trillion on 10 November, suggesting a 63% upswing.
The extreme fear condition also emerged during the 2020 market crash, when the market cap declined towards $1.081 trillion on 13 March 2020. The indicator flashed 10, showing panic selling by investors that catalyzed a sell-off.
Nevertheless, a rebound followed in the coming months, and the market cap climbed to $$3.9698 trillion on 16 August 2020. Let us wait for what the current market condition will bring.
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