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Bitcoin price prediction as the BTC fear and greed index slumps

Bitcoin price prediction as the BTC fear and greed index slumps

Last updated 11th Aug 2022
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The Bitcoin price is attempting to stage a comeback a day after it crashed below the important support level at $40,000. BTC is trading at $42,280, which is about 7% above the lowest level this month. It has a total market capitalization of over $800 billion, meaning that it has shed over $400 billion in value in the past few months.

Fear and greed index falls

The BTC price has struggled at a time when there is increased fear in the market. There are several ways to look at this. First, the CBOE volatility index (VIX) has jumped by over 20% this year alone. The VIX is the best-known gauge that measures volatility in the financial market.

Second, a bond sell-off has intensified in the market. The 10-year yield on US government bonds has jumped to over 1.8% while the 30-year yield has risen to more than 2.10%. These are the highest levels in more than a year.

Third, the CNN Money Fear and Greed Index has dropped to the neutral zone of about 49. Most sections of the index like the stock price strength, market momentum, safe-haven demand, and put and call options have moved to the fear zone. The cryptocurrency fear and greed index has slumped to the lowest level in over five months as well.

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This fear is mostly because of the Federal Reserve. In the past few months, the Fed has changed tune on inflation and warned that the situation was not transitory. As a result, there is a possibility that the bank will embrace a more hawkish tone in the coming months.

The next key catalyst for the Bitcoin price will be the upcoming testimony by Jerome Powell. In it, he will address the plans that the bank is planning to do to slow inflation.

After that, the BTC price will react to the upcoming US consumer inflation data scheduled for Wednesday this week. Analysts expect the data to show that consumer inflation jumped to 7% last month.

Bitcoin price forecast

bitcoin price

The four-hour chart shows that the Bitcoin price has been in a deep sell-off lately. This sell-off intensified when the coin moved below the key support at $45,800, where it struggled moving below in December. The coin has also moved below the 25-day and 50-day moving averages.

A closer look shows that the BTC price has managed to drop by an equal distance between the December high and the support at $45,800. This means that there is a possibility that the coin will resume a bullish trend in the coming weeks.

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Crispus Nyaga

Crispus Nyaga

Crispus is a financial analyst with over 9 years in the industry. He covers cryptocurrencies, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.