- Bitcoin sentiment plummets as the Fear and Greed Index drops 21 points to an 18-month low in the “Fear” zone.
- Mt. Gox liquidation fears and $1B ETF outflows drive Bitcoin market sentiment to a seven-week low.
- Analyst suggests market overreacting to Mt. Gox news, OTC sales likely to limit Bitcoin price impact.
The Crypto Fear and Greed Index, which gauges market sentiment for Bitcoin and the broader cryptocurrency sector, has plunged to its lowest point in nearly 18 months. On June 24, the index dropped by a staggering 21 points, descending into the “Fear” zone, marking one of the most significant day-to-day declines in recent memory.
This sharp decline is noteworthy as the index last entered the Fear zone, with scores ranging between 24 and 50, approximately seven weeks ago on May 3. However, it has not fallen below a score of 30 since January 11, 2023, when Bitcoin was trading at $17,200, just two months after the collapse of the FTX crypto exchange.
Just a week before this recent drop, the index was in the “Greed” zone with a score of 74. At press time, Bitcoin is trading at $61,341, dipping to a seven-week low on June 24, reflecting the current negative market sentiment.
The downturn in sentiment could be attributed to several significant factors. Over the past ten trading days, outflows have exceeded $1 billion from spot Bitcoin exchange-traded funds, indicating a lack of confidence among investors. Additionally, the news has raised concerns that Mt. Gox might be preparing to liquidate $9 billion worth of Bitcoin to reimburse its creditors. Germany’s decision to sell some of its Bitcoin reserves has further contributed to market unease.
In a recent post on X, prominent analyst Samson Mow discussed the market’s response to the Mt. Gox news, suggesting it might be an overreaction. Mow highlighted that the current drop in Bitcoin’s price is more a result of sentiment and fear rather than the liquidation of substantial holdings. He noted that any future sales from Mt. Gox would likely be conducted over-the-counter (OTC), which would lessen their impact on the market price.
The Crypto Fear and Greed Index calculates its scores using various factors. These factors include market volatility (25%), trading volume (25%), Bitcoin’s dominance (10%), and trends (10%). At one point, the index also took into account survey results (15%), but this aspect is currently not in use.
Since achieving a score of 90, indicating “Extreme Greed,” on March 5—when Bitcoin surpassed its previous all-time high of $69,000 set in November 2021—the index has been trending downward. The current sentiment reflects the volatility and uncertainty that continue to dominate the cryptocurrency market, underscoring the challenges investors face in navigating these turbulent waters.
