The weekly charts of Bitcoin, Cardano (ADA), XRP and other currencies fell by an average of 6%, with a correction of 10%. The cryptocurrency market has been trading in choppy waters for the past few days. Uncertainty has brought about a change in sentiment, as traders are preparing to fall further.
Data from Arcane Research recorded the reversal of the Fear and Greed Index. As Bitcoin and other major cryptocurrencies ranked by market capitalization retested key support levels, the indicator quickly shifted from “greed” to “fear”.
Due to the increase in volatility that caused the price to fluctuate between $55,4000 and $60,000, Bitcoin’s performance was particularly poor. On the other hand, Ethereum shows stronger strength because it can quickly rebound from a low point to the middle area near the current level.
As Arcane Research pointed out, the sentiment in the cryptocurrency market is far from indicating the top of the cycle. Despite the downward pressure, as most cryptocurrencies successfully retest their monthly lows, the fundamentals for future appreciation still exist. Arcane research noted the following points:
(…) In a bull market, the Fear and Greed Index shows that “greed” or “extremely greedy” lasts longer, short-term visits to the “fear” area, as we saw this spring. Therefore, the “fear” level is not necessarily a signal of the end of the current bull market (…).
Why the crypto market may need more blood before the new ATH
In the short term, it paints a very different picture for Bitcoin and other major cryptocurrencies. With the downward market trend, the US Dollar Index (DXY) has been performing strongly.
However, as analyst Justin Bennett tip Come out, the dollar could have found a local top. This can provide some breathing space for cryptocurrencies and enable them to return to their previous highs or to sell again at key resistance price points.
Nevertheless, traders still need to be cautious. Although the entire crypto market has reset, the derivatives industry is still showing signs of overheating, and the neutral financing rates recorded by most exchanges quickly turned positive upon the breakthrough.
Therefore, why Jarvis Labs believes that once the financing interest rate becomes negative, the Bitcoin and crypto markets may re-enter price discovery, as it did in September 2021. This may cause the Fear and Greed Index to further reduce the level of fear to extreme fear.
#BTC Binance’s funding rate is still hovering near the neutral value. It is best to wait a few days for the negative financing mechanism, as it did at the end of September, before making adjustments. pic.twitter.com/AJ5bKDr29k
— JarvisLabs (@Jarvis_Labs_LLC) November 23, 2021
At this point, pseudonymous trader Rekt Capital believes that Bitcoin shows little signs of strength. Falling into lows again may cause the entire market to fall due to the price of BTC.Analyst Said:
Let’s see how the daily closing price is, but investors are just scared at the moment. The collapse from here will definitely make them very scared (…). Greed drives up prices. Fear drives down prices. Extreme greed precedes the top. Extreme fear precedes the bottom. Bitcoin may need to reach extremely dire investor sentiment before it can finally bottom out.