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Extreme fear in market as Bitcoin dips to $54k: What’s next?

There is extreme fear in the market as the price of Bitcoin dips to $54k. Even though the price is currently holding strong and we are definitely not in a weak spot, there is panic. And this panic has arisen due to the $6k price drop in a day. The major correction has taken a lot of people by surprise as the day before, we rose to $59k, and things looked super bullish. Even altcoins are trading back every day and give an excellent buying and entry opportunity to long-term investors.

Extreme market fear

Fear and greed sentiment is a pretty solid metric to understand where the market will move. When there is extreme greed, we generally see price drops, and extreme fear is followed by swift increases. And currently, we are seeing extreme fear as the market score is at 21, which signifies extreme fear. A few days back, we were in an almost neutral category as the metric pointed to 47, but the 10% price correction changed it.

It is very interesting to see how the market sentiment can vary wildly at the same prices. Last month when we were at the same price, there was extreme greed in the market at 78, but now at the same price, there is fear. It seems that the market sentiment is decided by how the price was reached. If we move up to a level, there is greed; else, there is fear. This is good as extreme fear is the time when we can expect corrections to stop and prices to move back up again.

Funding rates neutralized

Funding rates on exchanges are a good example of understanding how many long positions or short positions are open. The latest price drop, though, has neutralized this metric, and we are back to the baseline. This is also good as the higher the funding rates are, the larger corrections we see, which is due to the domino effect. This means smaller liquidations are followed by larger liquidations and even larger ones.

What are your thoughts on the extreme fear in the market? And do you think that this means that the price will jump really soon? The most important thing to look out for will be the altcoin movement and hopefully another altcoin season. Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.

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