Bitcoin – From Greed To Fear

A Noteworthy Sentiment Change

Bitcoin and other cryptocurrencies have declined quite sharply in recent days. Here is an overnight snapshot of the daily chart:

(Click on image to enlarge)

Bitcoin corrects again…

It is difficult to gauge sentiment on BTC objectively, but there is a service that tries to do just that. According to its greed & fear barometer, the recent decline seems to have triggered quite a bit of apprehension:

The BTC sentiment measure of has flipped all the way from “greed” to “extreme fear” in just one week. 

Here is an overlay chart that shows the history of the indicator compared to the Bitcoin price:

(Click on image to enlarge)

Greed and Fear barometer vs. the Bitcoin price over time

Obviously, low readings have to be interpreted differently in bear markets than in bull markets, which is quite normal. However, it is quite surprising to see the indicator at such a low level at a time when Bitcoin is still trading relatively close to its recent high. Provided that BTC is still in a bull market, this could well be a sign that a buying opportunity will soon be at hand. 

It will be interesting to see whether the barometer will indeed work as intended in the current downturn.

Addendum: Calculation of the Greed and Fear Barometer:

Here is a brief explanation by of the components used in the calculation of the indicator and their weighting: 

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