Bitcoin
Bitcoin Price: Fear Gauge Warns that BTC is Still in Trouble
The fear and greed index suggests that Bitcoin is not out of the woods yet. The closely watched index hints that the current bounce in BTC and other cryptocurrencies could be temporary. Bitcoin price surged to $18,300 for the first time since November. It remains about 10% above the lowest level this year.
What is the Fear and greed index?
The fear and greed index is a sentiment tool that looks at several gauges in its study of the state of the market. The first known index was created by CNN Money and is one of the most popular tools in the market.
According to CNN, the index measures the state of the market by considering several gauges like market momentum, stock price strength, stock price breadth, put and call options, market volatility, safe haven demand, and junk bond demand.
Alternative.me developed a similar tool that focuses on the crypto market. It looks at market volatility, market momentum, social media, dominance, and trends. While these measures are important, I believe that they are not as exhaustive as those provided by CNN Money.
The fear and greed index ranges from 0 to 100. 0 means that investors are extremely fearful while 100 means that they are extremely greedy. In theory, investors should buy when it is in the fear level and vice versa.
Investors are still fearful
The fear and greed index currently stands at 25, which is a sign that investors are still fearful. This means that long-term investors can start accumulating now.
However, in most cases, buying when investors are fearful can be risky. Instead, I always recommend buying when it enters the greed level. In such a situation, it usually means that there is momentum going on.
Investors are fearful because of the rising fear of contagion in the crypto industry following the collapse of FTX. The US has arrested and charged Sam Bankman-Fried with numerous crimes, including money laundering and conspiracy.
The next key catalyst for Bitcoin price will be the upcoming interest rate decision by the Federal Reserve scheduled for Wednesday. Economists expect that the bank will hike interest rates by 0.50% in its final meeting of the year. A hawkish statement will be bearish for Bitcoin prices.
Bitcoin price dumped hard on Monday, briefly slipping below $41,000, erasing gains recorded in the previous week. The premier cryptocurrency seems to have exhausted its recent rally propelled by industry vulnerabilities. At the time of writing, the world’s largest cryptocurrency was trading slightly lower at $41,385. Bitcoin’s total market cap has dipped by 2% over the past day, while the total volume of BTC tokens traded over the same period climbed by 58%.
Fundamentals
Bitcoin price has been facing retracements and a rollercoaster over the past few days after recently rocketing to a 20-month peak. On-chain data has suggested that many investors used the opportunity to take some profits, leading to a decline in the asset’s price.
Bitcoin’s price slump is mirrored in the wider crypto market, with the global crypto market cap decreasing by 1.85% over the past 24 hours to $1.55 trillion. The total crypto market volume has increased by 32% over the same period. The Crypto Fear and Greed Index has plunged from a level of extreme greed to a greed level of 70, suggesting a decline in risk appetite.
Ethereum, the largest altcoin by market capitalization, is currently trading at $2,167, down almost 3% for the day. Meme coins have been hit hard by the market slump, with Dogecoin and Shiba Inu down by more than 4% over the last day.
Last week on Thursday, cryptocurrency experts took notice of…
Bitcoin price edged lower on Thursday despite optimism in wider markets on the back of the Fed’s interest rate decision. The flagship cryptocurrency has been consolidating above the critical level of $42,000 after briefly topping $44,000, its highest level in 20 months. Bitcoin was trading 0.71% lower at $42,569 at press time. BTC’s total market cap has increased by more than 3% over the last day to $832 billion, while the total volume of the asset traded over the same period jumped by 22%.
Economic Outlook
Bitcoin price has been trading sideways over the past few days, suggesting a pause in its recent rally towards $45,000. The premier cryptocurrency has decreased by 4% in the past week but remains 15.22% higher in the month to date. The digital asset has staged a significant recovery this year after a torrid 2022 in which a string of scandals, including the collapse of FTX, led to a market meltdown, undermining the credibility of the sector.
The crypto market has been buoyed by the Fed’s latest interest rate decision. The US Federal Reserve on Wednesday held its key interest rate unchanged for the third consecutive time, in line with market expectations. With the easing of the inflation rate, members of the Federal Open Market Committee (FOMC) voted to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%.
Additionally, the central bank indicated that three rate…
Bitcoin price has been hovering above the $43,000 psychological level over the past two days amid anticipation about the potential approval of a spot bitcoin ETF. The flagship cryptocurrency has climbed more than 16% in the past week and nearly 170% in the year to date. Bitcoin’s total market cap has increased by nearly 5% over the past 24 hours to $858.9 billion, while the total volume of the token traded rose by 43%. The Bitcoin price was trading at $43,914 at press time.
Fundamentals
Bitcoin price has posted significant gains over the past few days, climbing to its highest level since April 2022, before the crash of a stablecoin that started a litany of company failures, pummeling crypto prices. The world’s largest cryptocurrency briefly topped the crucial level of $44,000 on Wednesday amid rising momentum despite being massively overbought.
According to analysts, with no spot bitcoin ETF approvals yet and the halving event five to six months away, the market is riding on FOMO. Capital has been flowing in the Bitcoin market amid enthusiasm that the launches of spot ETF will bring in billions of dollars of new investment into the crypto sector.
Investors have already started providing capital as seed money for ETF products. Notably, a recent report by CoinDesk showed that the world’s largest fund manager, BlackRock, received $100,000 in capital from a seed investor for its spot bitcoin exchange-traded fund…
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