If the Fear and Greed Index is to be believed, this is now the biggest fear in the cryptocurrency market since July 2021. Popular sentiment indicator points to extreme fear from 15 today.

If the Fear and Greed Index is to be believed, this is now the biggest fear in the cryptocurrency market since July 2021. Popular sentiment indicator points to extreme fear from 15 today.

The reason for this extreme sentiment is the drop in Bitcoin price yesterday to nearly $ 43,000 and the break of the 32 day support line. This led to the liquidation of cryptocurrency futures contracts, most of which were long positions. As a popular cryptocurrency analyst @intocryptovers tweeted, “$ 725 million in #crypto liquidations [have taken place] in the last 24 hours.

On the BTC futures market alone, liquidations totaled $ 318 million. Of these, up to 88% were long positions. The most likely reason for the worsening decline was the cascade liquidation of long positions after BTC lost support of nearly $ 45,500. Since that event, Bitcoin has reached $ 42,500 in just four hours.

Fear and greed index at its lowest since July 2021

The deepening decline and the liquidation of long futures positions were instantly correlated to the readings of the popular Fear & Greed Index. Its value today is only 15 on a scale of 0 to 100. Additionally, all basic readings of historical values ​​indicate extreme fear today.

This is the lowest value since late July 2021, when Bitcoin experienced a deep correction after the all-time high of $ 64,850. At that point, the index fell several times below level 15 (red line) and was close to extreme fear for about 3 months (green area).

However, it should be mentioned that at the time the price of Bitcoin was trying to maintain support around $ 29,000. Today we are seeing a market filled with similar sentiments, but BTC is trading around $ 43,000.

It is common knowledge that the Fear & Greed Index is both a fairly good indicator of the sentiment of market participants and an indicator of investment opportunities. If interpreted the other way around, its readings can be an indicator of the best buying and selling opportunities in the cryptocurrency market.

This relationship was exemplified by cryptocurrency analyst and content creator @Kellykellam who tweeted a modified version of the Fear & Greed Index. According to her interpretation, current readings indicate “extreme buy” levels. Interestingly, the index itself was renamed “Smart Money Index” in its version.

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