Fear returns as Fear and Greed Index plunges for the first time since October
The decline in Bitcoin’s value has had a significant negative impact on the sentiment of cryptocurrency traders. The Crypto Fear and Greed Index, which reflects the overall emotional state of the crypto market, has dropped to 43, the lowest level it has been since last October. This shift indicates a transition from a state of greed to one of fear, highlighting the increasing anxiety among investors. When the index falls within the range of 26 to 46, it suggests that bearish sentiment dominates the market.
The market is currently being weighed down by ongoing capital outflows from U.S. spot ETFs. In fact, the outflow of funds from the spot Bitcoin ETF reached a record high of $564 million on May 1, the largest amount since the ETFs were launched in January.
Despite these challenges, analysts at Santiment maintain an optimistic outlook for the future of Bitcoin’s price. They believe that the market correction was to be expected, considering the significant increase in Bitcoin’s capitalization leading up to the halving. In the period following the halving in late April, investors were driven by rumors and news, resulting in a pattern of buying and selling.
Analysts attribute the growth in the Bitcoin market during October 2023 and early spring 2024 to the high expectations surrounding the halving event. However, those who purchased Bitcoin at the end of March, when the price was at its peak, have incurred losses.
In light of these developments, market analysts are skeptical about a swift recovery, as Bitcoin’s value has fallen below $57k.
