Cryptocurrency continues to withstand all of the assaults. It, like other financial markets, has been subjected to significant stress as a result of the ongoing political tensions. However, investors have found solace in the resilience of digital assets. Although returns have been low, there has not been a significant decline in prices. However, it has had little effect on market mood.
Investor sentiment has a significant role in the cryptocurrency market. Depending on the degree to which sentiment skews, it can serve as a predictor of the market’s direction. At the moment, market sentiment is strongly negative, as demonstrated by the Fear & Greed Index.
Market Falls To Extreme Fear
The Fear & Greed Index is a composite indicator of market mood based on a variety of criteria. This generates a number on a scale that indicates how investors feel about the market. This week has been a difficult one for the cryptocurrency market in terms of mood, with the market plunging deep into fear territory. After spending the majority of the previous week in neutral area, the Fear & Greed Index has remained devoid of Extreme Fear.
Prices have fallen into this zone as a result of the decline. Coming out of the weekend, bitcoin had began to revert back to the $40K-$44K level reached last week. By the start of the new week, the digital asset had gone below $40,000 once more, dragging the rest of the market down with it. Sentiment rapidly deteriorated, pushing the index into the acute terror zone.
March appears to be following in the footsteps of February, which ended the month in Fear. At the moment, the cryptocurrency market has a Fear & Greed Index score of 21. While this is not the lowest the index has ever been, it is nonetheless a poor value.
Is It Time To Stock Up On Crypto?
Attempting to time the market is frequently useless, given how volatile cryptocurrencies can be. That is not to say that investors cannot use indicators to determine the optimal moment to enter the market. The Fear & Greed Index is one of those indicators that investors frequently use to choose whether or not to enter the market.
In the investing industry, there is a saying that “buy when there is blood on the streets.” This implies that investors should acquire assets during periods of market weakness. One indicator of a good buying opportunity is when others are afraid and hesitant to enter the market. It is believed that this is the time when people begin packing their belongings and, as a result, the value of assets begins to increase.
This, however, does not always work out as expected, as purchasing digital assets during a bear market does not always imply that a turnaround is imminent. The cryptocurrency market is unpredictable and has its own mind, and sometimes when investors assume prices cannot fall much lower, they do. Thus, the optimal moment to buy is subjective and dependent on the investor’s experience.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.