The plunge in the cryptocurrency market started over the weekend and continues as of this writing. Bitcoin is dumped with more than 15%. Naturally, the general feeling of the crypto community has changed. Some believe that the 2020 uptrend is now over and that investors should be prepared for even worse consequences.
Market sentiment follows price
It is safe to say that the cryptocurrency market has seen better times. In just three days, total market capitalization fell from $ 264 billion to a low of $ 223 billion, marking a drop of more than 15%.
As it happens regularly, the general feeling within the community has followed the most recent price evolution.
According to the cryptographic monitoring resource, Santimentfeed, public opinion changed to excessive negativity. By following the keywords of the cryptocurrency discussions, they concluded that the mentions of “sell”, “sell” and “sold” have soared on most social media platforms. Santimentfeed uses social networks such as Telegram, Reddit, Professional Traders Chat, Twitter and Discord.
Research has also pointed out that the last time these negative discussions reached this level of popularity was in November 2019. At that time, Bitcoin lost more than $ 1,000 of its value in just a few hours when the China pointed out that cryptocurrencies are still illegal.
Fear and Greed Index: Extreme Fear
The Fear and Greed index confirms the dominant pessimistic feeling. It measures and aggregates different types of data, including volume, social media, surveys, BTC dominance and volatility, to establish current sentiment in the market. It provides the perspective from 0 (extreme fear) to 100 (extreme greed).
As of this writing, the index is pointing to 17 – noting the mostly scary state, or “Extreme Fear”. As recently as yesterday, before the sharpest part of the recent price drop, she was at 37, and a week ago, she was in a neural state – about 50. This again shows how fast the situation could change.
Opportunity?
Even if the current situation seems unfavorable to say the least, the sentiment of the general public does not always act as a valid price indicator. In fact, the market generally tends to move in the opposite direction to public opinion as it did in mid-December 2019. This is mainly due to the fact that most traders will lose over time , and the “whales” know this valuable information and act on it.
Compared to December 1019, the F&G Index indicated “extreme fear”. Bitcoin was trading at around $ 6,500, and most people thought it would drop below $ 6,000, or even go back to $ 4,400 and $ 5,000. However, a few hours later, the price of Bitcoin jumped $ 1,000.
Someone once said, “When everyone is afraid, be greedy.” it was Warren Buffet.
“Whenever the main sentiment becomes exceptionally pessimistic, a price rebound generally follows historically,” concludes Santimentfeed.
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