Bitcoin fear and greed index at its lowest since July 2021

The Bitcoin Fear and Greed Index, which tracks general community sentiment on the top digital asset, has sunk deep into “extreme fear” territory. The metric is currently at 15, which is the lowest level since July 21, 2021.

Lowest levels in six months

The Bitcoin Fear and Greed Index shows investors’ momentary feelings towards BTC, dropping them from 0 (“Extreme Fear”) to 100 (“Extremely Greed”). It does this by tracking many segments, including cryptocurrency volatility, polls, social media activity, and others.

On January 5, the price of bitcoin dropped from $ 47,000 to $ 43,000 within hours. The next day it continued its downtrend and moved below the $ 43,000 level. As typically happens in the cryptocurrency space, the decline in BTC prices affected the aforementioned metric and it plunged to 15 – a state of ‘extreme fear’.

Bitcoin Fear and Greed Index, source: alternative.me

Its fall could be the result of reports that the Federal Reserve will soon start raising interest rates to fight inflation in the United States. The current rate of the latter stands at almost 7%, the highest for almost 40 years.

Almost a month ago, the newly detected COVID-19 variant – Omicron – disrupted all financial markets, including the major cryptocurrency, which declined to $ 42,000. As a result of these developments, the Bitcoin Fear and Greed Index fell to 16 (again “Extreme Fear” territory).

Nonetheless, the asset quickly recovered and ended 2021 at nearly $ 49,000, marking a 60% price increase for the past year.

Is this a good buying opportunity?

This is not the first time that bitcoin has lost much of its value in a matter of days. So far, it has always managed to make up for lost ground, meaning these declines could not be seen as a major concern for long-term investors.

Earlier this week, the third largest bitcoin whale took advantage of the relatively low price and bought 456 BTC for around $ 21 million. Following the development, the address increased its holdings to 120,845.57 BTC, worth over $ 5.6 billion.

Another bullish sign for the future of the asset is Goldman Sachs’ view. The U.S. multinational investment bank, which is generally not as sympathetic to the crypto industry, recently estimated that investors may swap preferences between gold and bitcoin in the coming years. Thus, BTC could reach $ 100,000 in the near future, the institution concluded.

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