Bitcoin price crashed to a crucial support level as the Fear and Greed Index continued to fall. BTC coin plunged to a low of $76,845, down substantially from this month’s high of $82,845.
Crypto Fear and Greed Index is Falling
Bitcoin’s price could be at risk of further downside in the near future as headwinds intensify. These challenges have helped drive the closely watched Crypto Fear and Greed Index from the greed zone of 63 a few weeks ago to the fear zone of 39.
The Crypto Fear and Greed Index is a common gauge that uses several metrics to gauge the market’s state. It looks at key metrics such as social media activity and market volatility. In most cases, Bitcoin and most altcoins tend to retreat when market sentiment turns fearful.
The ongoing fear is visible in some key metrics. For example, data shows that spot Bitcoin ETFs added over $1.6 billion in the first 6 days of this month. They then erased all these gains and have now lost over $300 million this month.
The fear is also evident in Bitcoin liquidations continuing to rise this week. Thousands of traders have seen their bullish Bitcoin bets wiped out. Also, futures open interest has continued to fall this month, a sign that demand has cooled.
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Bitcoin price has also plunged due to macro factors that have pushed inflation to its highest level in years. Soaring inflation has pushed US bond yields to the highest level in years. In some cases, investors rotate from the risky Bitcoin to the high-yielding bonds. There is also a risk that the Federal Reserve will keep interest rates high for longer.
Bitcoin Price Prediction: Technical Analysis
The daily chart shows that BTC has slumped over the past few days. It has now settled at the 50-day moving average and the Major S&R pivot point of the Murrey Math Lines tool.
On the positive side, the Average Directional Index (ADX) has dropped to 24, its lowest level since May 2nd. A falling ADX indicates the downward trend has lost momentum.
Therefore, there is a likelihood that the Bitcoin price will bounce back in the near term. If this happens, its goal will be to retest the lower side of the rising wedge pattern and then resume the downward trend. This pattern is known as a break-and-retest, a common continuation signal in technical analysis.
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