Crypto Market “Etreme Fear” Metric Reaches Multi Month Low
December 07 2021 - 5:17PM
NEWSBTC
Fear runs deep in the crypto market as major cryptocurrencies
re-test critical support levels. On December 3rd, Bitcoin’s price
wicked into the lows at $40,000 resulting in a record number of
liquidated positions across exchange platforms. Related Reading |
Crypto Market Analysis: December 6, 2021 At the time of writing,
almost every cryptocurrency, but Bitcoin in the top 10 by market
cap seems to show signs of recovery. The benchmark crypto trades at
barely north of $50,000 after it was rejected at $51,500 with small
losses in the past 24-hours. Data from Arcane Research shows that
the Fear and Greed Index has been fluctuating with the price of
large crypto by market cap. During the last week, this metric stood
in the “Fear” levels right up until Friday’s crash when it dipped
further into “Extreme Fear”. Although the metric was able to bounce
from a low at 16 it now scores a 25 in the metric, almost 50 points
less than in November when it stood at Greed with 73. The index is
still close to its yearly lows, and closer to post-May 2021 levels
when an increase in selling pressure slumped the prices of every
major crypto. These levels remained at their lows from that moment
until mid-August, when Bitcoin finally broke above $40,000 and into
an all-time high at $69,000. Arcane Research noted the following:
(…) panic spread across the market following the weekend sell-off.
We haven’t seen such a fearful market in almost four months. The
market sentiment bounced off the lows on Tuesday as the market
recovered strongly, but we are still in the “fear” area (…). A
“Fear and Greed” Index on Extreme Fear levels, according to certain
analysts, has historically preceded crypto market local bottoms.
However, a run into new highs could see an obstacle as the
macro-economic outlook turn complex. The Crypto Market At Risk For
Macro Factors? QCP Capital believes the selloff was caused by fear
of the new COVID-19 variant, Omicron, inflation concerns, weakness
in the Chinese stock market, and the possibility that the U.S. FED
begins to taper its asset purchasing program. Related Reading | How
Crypto Champions can help you increase the rarity of your NFT The
Chinese crypto market, in particular, holds concerns. This has
translated into persistent negative funding rates across exchanges
platforms. QCP Capital claimed: This indicates persistent selling
out of China. In contrast, funding rates in other exchanges
normalised very quickly (…). With the persistent negative funding
in Chinese exchanges, we reckon a push higher in spot could
actually trigger a short-squeeze. The crypto market already shows
signs of this short squeeze, but it could face more downside due to
the aforementioned macroeconomic factors.
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