Markets
Bitcoin (BTC) Price Drop to $53,000 Pushes Fear and Greed Index to Lowest Level Since Early 2023
Cryptocurrency investor sentiment hits the most negative levels since the end of crypto winter 2022 as bitcoin (BTC) The drop below $54,000 dragged digital asset markets lower.
The widely followed Cryptocurrency Fear and Greed Index created by data source Alternative.meshows market enthusiasm for bitcoin and other major cryptocurrencies, with 0 being extreme fear and 100 being extreme greed.
The indicator fell to 29 on Friday, its deepest dive into fear territory since early January 2023, when bitcoin was trading around $17,000 after the crushing bear market of 2022.
The metric notably sent a contrary sell signal last March when it hit the 90 level near what has proven to be (so far) the 2024 top of the broader cryptocurrency market and bitcoin’s all-time high of around $73,500. Since then, BTC and ether (ETH) are down 25-30%, while major altcoins have plunged around 50% and smaller tokens have lost even more.
Extreme levels of fear can present buying opportunities, but the reality is more nuanced and several factors must be considered.
The main catalysts behind the slowdown were the unloading of bitcoins seized by German And US Governmentsas well as the “preventive sale” of the assets of the defunct Japanese stock exchange Mt. Gox has started paying back investors this month, Rachel Lin, CEO and co-founder of derivatives trading platform SynFutures, said in a market update.
Selling pressure is unlikely to abate in the short term, she said. The German government still holds about $2.2 billion worth of BTC, the U.S. government holds over $12 billion, and the Mt. Gox estate holds over $8 billion in assets, according to data from blockchain tracing platform Arkham Intelligence watch.
“The direction of bitcoin in the coming days will be determined by selling pressure from Mt. Gox users,” Lin added.
“The market expects most Mt. Gox users to dump their tokens, but we could see a rebound if sales are lower than expected,” she said. “On the other hand, if there are enough sales to push the price down, we could soon reach the $50,000 level.”
Markus Thielen, founder of 10x Research, cut his price target to $50,000 from $55,000. “This could force ETF holders and miners to liquidate more positions,” he said in an emailed note, adding that August and September are historically “difficult months” for bitcoin. However, he added, “if the Federal Reserve cuts interest rates in September, bitcoin could see another attempt at a rally.”