Negative sentiment in the crypto market has been ramping up in the last few months. This comes hot on the heels of a market crash that saw top coins such as Bitcoin and Ethereum drop to one-year lows. It has resulted in some of the lowest scale readings that the Fear & Greed Index has put out in recent times and it looks like this is only just beginning as negative sentiment has now touched yearly lows.
Crypto Market In Extreme Fear
Just like with any declining market, investor sentiment has turned to the worse. Indicators show that the market is now in extreme fear, meaning that investors are wary of playing in the space. This has been the case for a while but the recent readings provided by the Crypto Fear & Greed Index show that it is worse than expected.
The index currently displays a score of 10 which is one of the lowest levels that it has been in the last six months. The last time the index was this low was in January when the market was still reeling from the December 4th crash. What followed was a prolonged period of downtrends, similar to what is being experienced in the market for the last few weeks.
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This negative sentiment continues to wax stronger even through recoveries. Currently, the price of bitcoin is back above $30,000 and Ethereum continues to push for $2,000 but that has not triggered any change in investor sentiment. Indicating that sentiment is not following the market movement as strongly as it used to and is rather hanging on to where investors believe the market is headed.
Total crypto market trending $1.25 trillion | Source: Crypto Total Market Cap on TradingView.com
Recovery Not Strong Enough?
The recovery that is being recorded in the early hours of Monday is a welcome one. However, it is debatable if this recovery will last. This is because the bears have since had a stronger hold on the market compared to the bulls, making the market prone to a sudden pull-down.
Looking at indicators for Bitcoin, which is a market mover, it continues to trade below the 50-day moving average despite the recovery. It remains a seller’s market with indicators like this especially given where the next support level lies for the digital asset.
Related Reading | Ethereum Profitability Dumps To 2-Year Low As Price Corrects Below $2,000
For BTC, adequate support is present only at the $28,108 level. This means that any decline now will see the digital asset crash through its Sunday gains and fall back to pre-weekend levels. It also doesn’t help that indicators are pointing to sell on all angles.
To maintain the current recovery trend, there will need to be a large influx of funds into the market. Even at oversold levels, various cryptocurrencies remain prone to further declines, unless buyers can ramp up their activity enough to stall a downtrend.
Featured image from Phemex, chart from TradingView.com
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