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Bitcoin (BTC) Price Crash to $53K Pushes Fear and Greed Index to Lowest Since Early 2023
Cryptocurrency investor sentiment has plummeted to its lowest levels since the end of the 2022 crypto winter, while bitcoin (BTC) The fall below $54,000 has sent digital asset markets into a tailspin.
The widely followed Crypto Fear & Greed Index, created by data source Alternative.meshows the market’s enthusiasm for bitcoin and other major cryptocurrencies, where 0 indicates extreme fear and 100 translates to extreme greed.
The indicator fell to 29 on Friday, the lowest level in the fear zone since early January 2023, when bitcoin was trading around $17,000 after a severe bear market in 2022.
The metric notably sent a contrarian sell signal last March, when it hit the 90 level, near what has turned out to be (so far) the broader cryptocurrency market’s 2024 high and bitcoin’s all-time high of around $73,500. Since then, BTC and ether (ETH) They dropped by 25%-30%, while major altcoins dropped by around 50% and smaller tokens lost even more.
Extreme levels of fear can present buying opportunities, but the reality is more nuanced and requires considering several factors.
The main catalysts behind the recession were the dumping of seized bitcoins from German AND United States Governmentsalong with the “preemptive sale” as assets of the defunct Japanese stock exchange Mt. Gox has started refunding investors this month, said Rachel Lin, CEO and co-founder of derivatives trading platform SynFutures, in a market update.
The selling pressure is unlikely to ease in the short term, he said. The German government still holds about $2.2 billion in BTC, the U.S. government has more than $12 billion, and the Mt. Gox estate has more than $8 billion in assets, blockchain tracking platform data shows. Arkham Intelligence Shows.
“The direction of bitcoin in the coming days will be determined by the selling pressure from Mt. Gox users,” Lin added.
“The market expects most Mt. Gox users to sell their tokens, but we could see a rebound if the selling is less than expected,” he said. “On the other hand, if there is enough selling to push the price lower, we could soon hit the $50,000 level.”
Markus Thielen, founder of 10x Research, cut his price target from $55,000 to $50,000. “This situation could force ETF holders and miners to liquidate more positions,” he said in an emailed note, adding that August and September are historically “tough months” for bitcoin. However, he added, “if the Federal Reserve cuts interest rates in September, bitcoin could see another attempt at a rally.”