Crypto Fear Reaches Six-Month Peak: Time To Buy Bitcoin?

2022-1-13 22:00

Fear in the crypto market is now the highest it has been in the last six months, suggesting that now may be the time to buy Bitcoin.

Crypto Fear And Greed Index Shows Lowest Value In Six Months

As per the latest weekly report from Arcane Research, the fear and greed index reached the lowest values this week since July.

The “fear and greed index” is an indicator that measures the general sentiment around the Bitcoin and wider crypto market.

The metric uses a numeric scale that goes from zero to hundred for representing the sentiment. When the values are below fifty, it means the market is currently fearful.

On the other hand, values above fifty imply that the market has become greedy. Extreme values of below 25 and above 75 signify sentiments of extreme fear and extreme greed, respectively.

Such extreme values usually occur around bottoms and tops. Hence, some traders believe it’s best to sell during extreme greed and buy more crypto like Bitcoin while the sentiment is that of extreme fear.

Warren Buffet believed in this idea, as suggested by a famous quote of his: “be fearful when others are greedy, and greedy when others are fearful.”

Baron Rothschild is believed to be one of the earliest of traders to follow this philosophy. He said “the time to buy is when there’s blood in the streets.”

Related Reading | SOPR Shows Bitcoin Holders Continue To Sell At A Loss, Similar To May-June 2021

Now, here is a chart that shows the trend in the Bitcoin fear and greed index over the past year:

Looks like the value of the indicator is very low at the moment | Source: The Arcane Research Weekly Update - Week 1

As you can see in the above graph, the crypto market sentiment seems to be that of extreme fear at the moment. Currently, the value of the indicator looks to be around 21.

Earlier in the week, the fear and greed values were even less, reaching the same lows as the ones seen back in July. The price of Bitcoin also bottomed around then.

Related Reading | ARK Invest CEO Cathie Wood On What Will Drive Bitcoin Correction

However, it doesn’t mean a bottom will necessarily follow this time as well. Before the July bottom, such extreme fear values persisted for a few months, which may also be the case this time.

Nonetheless, if the contrarian buying philosophy is anything to go by, now might be a good time to pack up on more crypto.

Bitcoin Price

At the time of writing, BTC’s price floats around $42.8k, down 8% in the last week. The below chart shows the trend in the price of the crypto over the past five days.

BTC's price shows some uptrend | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

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