The Bitcoin Fear and Greed Index, which reveals the crypto community’s general feelings towards the primary cryptocurrency, has gone into an “extreme fear” territory for the first time since the end of July. This comes as the digital asset’s price dropped by $8,000 in just a few days.
The latest developments of the financial market, especially the recent Evergrande debt crisis in China, caused a major setback for the digital asset industry. As a result, bitcoin’s price plunged massively to below $40,000, which became the lowest price tag since early April. Somewhat expectedly, similar developments have caused a rapid change in the community’s sentiment on the asset.
The Bitcoin Fear and Greed Index confirms these expectations. The popular metric that determines the general feelings towards BTC has dropped to a state of “extreme fear.” The last time it dived to such a low level was on July 21st when bitcoin dipped below $30,000.
The results of the index range from 0 – extreme fear to 100 – extreme greed as today’s number stands at 21. What typically causes swings of the metric is the price of the cryptocurrency. However, various other factors such as volatility, market volume, social media, surveys, trends, and dominance also play an essential role.
The Fear and Greed Index measures not only the crypto community’s behavior towards bitcoin but also towards other digital assets. Ethereum’s situation, for example, is not much different as it has entered a “fear” territory (27), coinciding with ETH’s drop below $3,000.
While the phrase “extreme fear” might sound like a concern to most people dealing with digital assets, it is not always the case. Many experts in the field believe that bitcoin being in this state is actually a good buying opportunity. After all, the Oracle of Omaha – Warren Buffett – previously advised that investors should be greedy when the crowd is fearful and vice-versa.
It seems that one of the largest bitcoin whales is also a believer in this theory as he took advantage of the current dip to accumulate another sizeable portion of the cryptocurrency.
