Crypto Market in “Extreme Fear”: Time to Buy Low？

The crypto market is under severe bear pressure, and a glance across the price chart of the top cryptocurrencies reveals this. Bitcoin, the largest cryptocurrency by market capitalization, lost nearly 24% in the past month, leading other cryptos to a massive loss of value in the cryptocurrency market.

Last month‘s events have changed the crypto market narrative, flipping a once bullish market into a significantly bearish environment. The swift change in narrative impacted users’ sentiments, with the crypto market moving from a greedy sentiment to extreme fear in less than 30 days.

Fear and Greed Index: A Rapid Shift in Sentiment

A historical assessment shows the crypto market was “Greedy” last month and “Neutral” a week ago before shifting into “Extreme Fear” in the past few days. How quickly things changed in the market has triggered FUD, leaving many traders confused and unsure whether to hold on to their positions or to sell off their portfolios.

For context, the Fear and Greed index measures the emotional state of crypto market participants. The analysis tool measures users reactions using human behavioral data and their potential behavior under varying market conditions. People tend to get greedy during bull runs because of the Fear Of Missing Out (FOMO). In contrast, they often sell their assets during market declines because of Fear, Uncertainty, and Doubt (FUD).

Contrarian Investing: Buying When Others Are Fearful

Expert traders have figured out ways of capitalizing on human behavioral tendencies to find profitable opportunities in the crypto market. Therefore, experienced traders often consider extreme fear market conditions as buying opportunities, noting the chance that digital assets would be at their lower prices and more affordable. In contrast, they see greedy conditions as opportunities to sell.

That explains the zig-zag behavior of the crypto market, highlighted by the past months trend when the market tumbled from “Extreme Greed” to “Extreme Fear” over a short period. Considering the prevailing situation, many top experts believe the cycle will continue, and traders who purchase crypto at the current price could be making the right decision.