The Bitcoin Fear and Greed Index has plunged to 10, marking a level not seen since June 2022, indicating extreme fear in the market and raising concerns about potential volatility and investor sentiment.
The fall in sentiments comes as the price of the OG-crypto has been dwindling for the past 30 days, mainly reacting to macroeconomic news.
At the press time, Bitcoin is trading at $86,258.64, down 2.77% as compared to the same time last day.
Bitcoin Fear and Greed Index: Market Implication
By examining variables like volatility, market momentum, social media activity, and surveys, the fear and greed index serves as a tool for determining the emotional state of investors.
“Extreme fear,” denoted by a number of 10, usually occurs when the price of Bitcoin falls sharply or when market uncertainty rises. This is frequently seen as an indication that investors are concerned about the direction of the market.
Since, pessimism frequently results in oversold situations, historically, when the index hits extreme fear zone, it has occasionally been a hint for a market bounce.
It also suggests increased risk, though, as investors are reluctant to make significant trades. The continuous volatility and unpredictability that continue to define the cryptocurrency industry are reflected in the index’s recent decline.
Also Read: Bitcoin Experiences Brief Drop to $94,000 Following Trump’s 25% Tariff on Aluminum and Steel
Bitcoin Reacts to US Imposed Tariffs
Most market participants believe that Bitcoin’s price fall is directly attributable the imposed tariffs that the US has placed on European goods.
In response to trade disputes, the U.S. recently placed duties on a number of European goods, escalating tensions between the two areas.
The United States argues that the tariffs are necessary to safeguard American industry, and they mainly target areas like luxury goods, agriculture, and aerospace. This move follows disagreements over subsidies provided to European firms like Airbus, which the United States claims unjustly stifles competition in international marketplaces.
European leaders have hinted at possible countermeasures in retaliation, which could intensify the trade dispute. Both American and European consumers are anticipated to be impacted by the tariffs, which will raise the cost of the impacted items.
Bitcoin’s Price Fall: Will it Hold the Current Level?
Ali Martinez, a cryptocurrency analyst, recently issued a warning on X (Twitter) regarding the possible price collapse of Bitcoin, pointing out that the cryptocurrency is breaking below a parallel channel.
If Bitcoin doesn’t swiftly recover the $92,500 mark, he pointed out, this technical pattern increases the probability of a decline to $81,000.
Martinez’s analysis suggests that additional downward movement could result if this critical support level is not regained. Since the price of bitcoin is still fluctuating, many traders are keeping a careful eye on the situation. Some anticipate a recovery if the $92,500 level is regained.
Investors are nevertheless concerned about the possibility of additional price drops otherwise.
With a price volatility of 3.06% over the previous 30 days, Bitcoin had 12 out of 30 (40%) green days. With eight technical analysis indicators indicating optimistic signals and twenty-three indicating bearish indications, the overall sentiment for the price prognosis of Bitcoin is pessimistic.