After 18 consecutive days of remaining at the lowest level of a sentiment index, the crypto market has begun to show the first signs that sentiment is gradually improving.
The Crypto Fear & Greed Index, a tool for measuring the overall sentiment of the crypto market, recorded a “Fear” (Fear ) score of 28 on Saturday, marking the first time since November 10 that this index is no longer at the “extreme fear” (Extreme Fear ) level.
The Cryptocurrency Fear and Greed Index announced a “Fear” score of 28 on Saturday | Source: alternative.meThe fact that this index has remained in the most pessimistic zone for most of November – which is considered Bitcoin's best-performing month (BTC) in history – has caught the attention of the global crypto market community.
According to traders, times when the index reaches “extreme fear” are often a sign of a bottom formation.
On November 15, analyst Matthew Hyland noted that the index is at an “extreme fear level” throughout the entire cycle. Hyland believes that if this trend continues regarding BTC's dominance rate, the market will face “maximum pain.” Just a few days later, on November 23, analyst Crypto Seth remarked that “extreme fear” is even an understatement of the actual level of concern.
However, trader Nicola Duke believes that whenever this index reaches extreme fear levels, it often marks the “local bottom” of Bitcoin.
Other signals also indicate that the market sentiment is showing signs of recovery. The Santiment analytics platform stated on Wednesday that Bitcoin is exhibiting a “generally positive sentiment” after its price rebounded close to the 92,000 USD threshold, based on the platform's social media bullish/bearish sentiment index.
The crypto market remains in a cautious state, hedging against risks.
Santiment notes that discussions about Bitcoin on social media are currently mainly focused on price volatility and the activities of large institutions, such as ETFs and large treasury bond purchases.
However, according to CoinMarketCap's Altcoin Season Index, investors remain cautious and maintain a risk-off stance. This index is currently at 22/100, indicating that the market is still in “Bitcoin Season” – a measure that oscillates between altcoin season and bitcoin season.
André Dragosch, head of research at Bitwise Europe, believes that the price of Bitcoin is currently misaligned due to inaccurate assessments of macroeconomic prospects, especially in light of the increasing expectations of an impending recession.
“The last time I witnessed such an asymmetric risk-reward level was during the COVID pandemic,” Mr. Dragosch shared.
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