Crypto Fear And Greed Turns Neutral, What’s Next?
April 05 2022 - 1:00PM
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Bitcoin and the crypto market have seen downside price action on
shorter timeframes. The first crypto by market cap has been trading
in a tight range this week with sudden spikes in volatility
impacting smaller cryptocurrencies. Related Reading | Dogecoin
Soared After Elon Musk Bought 9.2% Of Twitter, What’s Next?
Momentum seems to be favoring the bulls as Ethereum (ETH), Solana
(SOL), Terra (LUNA), keep their gains as Bitcoin hints at further
lows. SOL’s price records a 22% profit which makes it the best
performing asset in the crypto top 10. At the time of writing, the
crypto total market stands above the important mark of $2 trillion.
Per a recent report from Arcane Research, crypto market
participants are at a crossroads. The Fear and Greed index is
currently at neutral ground after it saw a major spike from below.
As seen below, the research firm records the metric at 53 which is
slightly above Greed levels. As Bitcoin and other large
cryptocurrencies move sideways, so has this metric. Since December
2021, market participants seem to be leaning more to the fearful
side with two separate times when the index stood below Extreme
Fear. Sudden moves into either extreme usually signal a price
reversal. The chart above fits this thesis as long periods of
fearfulness are followed by a period of greed. This time, as market
participants feel greed, Arcane Research hinted at a possible new
reversal: The Fear and Greed Index has stabilized at neutral
levels, fluctuating around 50 throughout the week, suggesting a
reasonably balanced market sentiment. The index has now trailed
around 50 for ten days. The last time this happened, market
sentiment plummeted to fearful terrain shortly after. Additional
data from Material Indicators seem to support a bearish thesis. At
its current levels, Bitcoin has a lot of resistance. There are over
$30 million in asks orders with little support below. The Factors
That Could Play In Favor Of The Crypto Greedy Although the crypto
market could continue to outperform the largest crypto, its
short-term performance will impact the altcoin market. The high
amount of asks order suggests downside, as mentioned, but there are
bullish factors currently at play. As noted by Yuya Hasegawa, an
analyst at Bitbank, The price of Bitcoin has benefited from the
United Kingdom Treasury announcement. The financial institution
seems to be warming up to crypto as it plans to embrace NFT and
stablecoins to improve its payment system. In that sense, the
former EU member hints at a friendlier stand toward digital assets.
If the new European regulation on this asset class turns hostile,
as it seems to be, the U.K. could become the region’s alternative
to maintain its operations. In addition, the crypto market seems to
be benefiting from a relief in tech stock companies’ prices. These
companies rallied, as the analyst noted after Elon Musk announced
his acquisition of a 10% stake at social media company Twitter.
Related Reading | Bitcoin Bullish Signal: 30MA STH-SOPR Returns
Above 1 After 4 Months Finally, Hasegawa believes the Bitcoin Miami
Conference could offer Bitcoin and the crypto market some
short-term support. The event is set to start tomorrow Wednesday
and could see important bullish announcements like last year.
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