For representing the sentiment, the metric makes use of a numeric scale that runs from zero to hundred. All values of the index greater than 50 imply the market is greedy, while those below the threshold suggest fearful investors.
In these main sentiments, there are two zones that have historically been particularly important for prices of coins like Bitcoin. These are the “extreme greed” and “extreme fear” regions and they occur at values greater than 75 and below 25, respectively.
The relevance of the extreme sentiments is that tops have usually taken place in the former type of periods, while bottoms have formed in the latter ones.
Now, here is a chart that shows the trend in the crypto fear and greed index over the last year:
As you can see in the above graph, the crypto fear and greed index recently observed a small surge as the Ethereum merge came around, but as soon as the investors realized it was a sell-the-news event, the sentiment dropped back down sharply.
Two days ago, when the report came out, the indicator had a value of 23, which would suggest extremely fearful mentality. Since then, it hasn’t budged much as today’s value is still 22.
The crypto market has been in a state of fear since the month of April, making it a continuous run of such sentiment for 171 days now.
Back during the relief rally in August, the indicator came the closest to escaping from this region and ending what has become the longest streak of fear in the history of the index. However, before investors could embrace greed, the rally ended and the sentiment immediately plunged down.
Currently, it’s unclear when the run would finally come to an end. If it keeps on and runs through October, crypto investors would have observed 200 days of fear.
At the time of writing, Bitcoin’s price floats around $19.2k, down 5% in the last seven days. Over the past month, the crypto has lost 10% in value.
Looks like the price of the coin has been mostly moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Thought Catalog on Unsplash.com, charts from TradingView.com, Arcane Research