Cryptocurrency market sentiment drops back down to levels not seen since October as Bitcoin’s (BTC) price falls.
The Crypto Fear & Greed Index, a multifactorial measure of crypto market sentiment, currently indicates a level described as “neutral.” The index stands at 50, indicating that the crypto market is now overrun by greed.
The crypto market has not been this low since Oct. 14, when it reached a score of 48. Since Oct. 15 until Jan. 9 the score has only varied between “greed” and “extreme greed” phases.
The details
This fall in score comes after Bitcoin’s price fell as low as under $92,000 on Jan. 9, following this week’s reports that the United States government was allowed by a court to sell $6.5 billion worth of Bitcoin (BTC) seized from the world’s first darknet market. A judge denied a motion that would prevent the forfeiture of 69,370 BTC from the Silk Road deep web black market.
Another reason for increasing market pressure is that market participants are now expecting prolonged inflation to take hold. Min Jung, an analyst of Presto Research, said:
“Not just crypto, but both the NASDAQ and S&P 500 fell more than 1% [on Jan. 7], driven by concerns over inflation after ISM data revealed faster-than-expected growth in the U.S. economy. […] This heightened fears of persistent inflation, [led] to a surge in bond yields, with the 10-year Treasury reaching its highest level since April.”
Yesterday, the broader crypto market saw $463 million worth of liquidations. Such large liquidations are often described as a “leverage flush” by market observers and are viewed as a sane cyclical occurrence, making the market more stable. Large amounts of leveraged positions in a market result in forced sellers or forced buyers during liquidations, which might significantly amplify market movements and volatility.
At the time of writing, Bitcoin is trading at nearly $93,900 after losing just 0.25% of its value over the last 24 hours. The price of the world’s first cryptocurrency is also 4.1% lower than where its price stood seven days ago.
