After a brutal few weeks, the cryptocurrency market remains wobbly, with Bitcoin trading at around $30,000 on Tuesday. (It was $29,746 at time of publication.)
Though things are not as bad as they were last week, investors are still afraid, according to hosting site Alternative. The same day, its Crypto Fear and Greed Index, which analyzes the sentiment of the Bitcoin market, dropped to a level not seen since March 2020.
Representing “extreme fear,” the index is now at an 8, down from 14 just yesterday and 28 last month.
A value of 0 represents “extreme fear,” while 100 represents “extreme greed,” the site explains. The index takes into account a few factors when deriving a score, including Bitcoin volatility, market momentum and volume, social media reactions, coin market capitalization, and Google Trends data.
Over the last week, market sentiment was grim, ranging between a score of 9 and 14.
Things took a turn in early May after the Federal Reserve indicated it would raise interest rates by half a percentage point, which sparked a wider market selloff. Bitcoin, the largest cryptocurrency by market value, began to plummet alongside tech stocks.
The price of Bitcoin sank further once stablecoin TerraUSD (UST) lost its $1 peg and its sister token Luna began to crash last week, adding more downward pressure to the cryptocurrency market. This wiped out many cryptocurrency investors’ life savings, and according to a recent Bank of America Research report, the fear gripping the cryptocurrency market is comparable to both the bursting of the dotcom bubble and the Global Financial Crisis of 2008.
Nonetheless, many investors are buying the dip. According to a report by CoinShares, Bitcoin saw a surprising level of inflows through May 6, the week of the crash, when it still brought in $45 million.
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