The market sentiment has shifted from greed to fear again. This happened after the Bitcoin fear and greed index hit a score of 28 as the markets dipped. The latest 20% correction from $47.3k to $39.2k has triggered this change of sentiment, and it’s actually good. With fear in the market, the chances of further dump reduce. At the same time, market makers often pump BTC when there is too much negativity and fear.
Bitcoin fear and greed index shows extreme fear
The fear and greed index hit extreme greed when the market hit $48k. This was a clear sign that there could be a correction, and it happened. Yes, the rejection from $48.5k and later from $47.3k were the primary reasons, but the market sentiment and funding rates on exchnages also played a role. Right now, we are trading near $40k, which is critical support for BTC. If we were to move up, this level needs to hold and push the price back above $42k.
When the price jumped from $35k a while back, the same index was at greed when BTC touched $40k. So, every time we consolidate, the fear and greed index also shows the market has reset, and it could be time to move back up again.
Finally, I would like to repeat the quote from Warren Buffet, “Be fearful when others are greedy and greedy when others are fearful.”
Funding rates on exchanges
Another effective way to understand whether the market is bearish or bullish is the funding rates on crypto exchanges. When it is negative, we can say that more shorts are open in the market and vice versa. Isn’t more open shorts a negative thing for the market? Well, it might seem so, but it’s mostly the opposite.
The market generally moves in the direction opposite to these positions. Big players push prices high or long to liquidate the long or short positions. So, oftentimes if you see that the funding rates are too high or too low, it might mean a correction or pump is due.
What are your thoughts as the Bitcoin fear and greed index hits fear at 28 points? And do you think it’s a sign that we might move up or there will be more downside? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Lawsuit filed against SEC by an XRP investor making them defendants for the first time.
