The Bitcoin Fear and Greed Index reached panic levels in early 2020

The cryptocurrencies’ fear and greed index, which monitors market sentiment sentiment, has entered the “fear” range from “extreme greed” in a week. This is the first time since March last year that this index has entered this region.

According to cryptoslate, the fear and greed index measures many factors such as fluctuations, price acceleration, trading volume, market sentiment, market trends and many other factors and presents them in the form of an index. The fear and greed index is graded from zero (maximum fear) to 100 (maximum greed).

It can be said that the index of fear and greed shows the approach of a large part of the supporters of cryptocurrencies. When the index is in the fear zone, it means that the price is likely to fall and a large number of users are selling their assets.

On the other hand, high greed is usually accompanied by sharp upward jumps; Because demand exceeds supply and prices rise. Of course, the forecasts of this index are not definitive and traders can only use it to examine the cryptocurrency market environment.

News of Biden Cabinet’s new tax policies on Thursday caused the cryptocurrency market to plummet; The news, according to many, sparked the beginning of a cycle of fear in the market. Sources close to the Biden administration said on Thursday that the new US administration was seeking to raise taxes on capital gains. Under the new plan, revenues of more than $ 1 million will include 43.5 percent tax.

The release of this news caused the sales pressure in various markets to increase significantly. Currently, the market situation has stabilized to a large extent and Bitcoin has been able to reach above $ 50,000.

As we said before, the index of fear and greed has now reached the range of fear and the number 30. This is unprecedented since April 2020. At that time, after the fear and greed index reached the fear zone, the price of Bitcoin fell from $ 10,000 to $ 5,000.

Scott Minerd, chief investment officer at Guggenheim, said on Friday that the price of bitcoin could fall by as much as 50 percent in the short term.

There is a 50% chance of a fall in the short term; Because [the rise in prices] was too fast and too high.

He added:

I think there is a possibility of a pullback of $ 20,000 to $ 30,000, which is a 50% reduction; But the interesting thing about Bitcoin is that we’ve seen similar crashes before. This fall is a normal evolution in the long-term bullish market.

The Bitcoin Fear and Greed Index reached panic levels in early 2020