For the first time since May 12th, the well-known cryptocurrency market Fear and Greed Index is in the neutral zone. Before that, it was in a prolonged state of either fear or extreme fear.
Bitcoin Fear and Greed Index Goes Neutral
It goes without saying that the cryptocurrency market (as well as other markets) is particularly emotional. Whenever the prices are going up, people tend to get greedy, and vice-versa: when the markets start to slump, they get fearful.
Market sentiment is an incredibly important thing to monitor and be aware of when making an investment or trading decision.
One tool that gauges the current cryptocurrency market sentiment is the Fear and Greed Index. It measures data from various sources, which include volatility, market momentum, and volume, social media, surveys, dominance, and trends.
At the time of this writing, the index is in a neutral state, which hasnt been the case since May 12th this year. Ever since that date, the prevailing sentiment has been either fear or extreme fear, which can be explained by the decreasing prices, overall stagnation, and indecisiveness.
Chart by Alternative.me
What Does This Mean for Bitcoins Price？
First off, it‘s important to note that the Fear and Greed Index measures the sentiment across the broader cryptocurrency market and not just Bitcoin. However, given BTC’s dominance, as well as the tendency for it to dictate the overall pace of the industry, its perhaps reasonable to assume that a large part of it is dictated by bitcoins price.
With this said, the market sentiment is currently neutral, which is a sign of indecisiveness. In other words, the index shows that investors are still looking for a clear direction.
As CryptoPotato recently reported, BTC is still facing serious resistance at the $40,500 mark. Thats where we can find a confluence of technical indicators such as the bearish .382 Fib level and the 100-day moving average. This is the first imminent obstacle for the cryptocurrency.
As for the index itself, when it‘s in a state of extreme fear, this usually signals a good buying opportunity, and when it’s in a state of extreme greed, it‘s usually time to sell. However, when it’s neutral, its perhaps best to wait for directional confirmations.