Tactical Bottom May Be Near, Greed & Fear Index Suggests
Bitcoin sentiment has taken a nosedive into extreme pessimism, indicating a potential tactical or interim low from which a price rebound could emerge, as per insights from 10x Research.
The firm’s proprietary “Greed & Fear” Index, a metric that gauges market sentiment, has plummeted to a historic low of under 5 points. Readings below 10% signify extreme fear or pessimism, while readings above 90% suggest over-optimism.
Of particular significance is the 21-day simple moving average of the index, which has dipped to 10%, a level that has consistently marked tactical lows in the past.
Markus Thielen, founder of 10x Research, highlighted the current scenario, stating, “Our own 10x Greed & Fear Index has been hovering near its lowest possible reading, and the slower-moving average has now reached the 10% zone, a level that often indicates a tactical low.”
However, reaching peak pessimism does not necessarily indicate an immediate reversal of the downtrend. While prices may continue to decline, the pace of decline is likely to decelerate, hinting at a potential tactical low on the horizon.
Thielen elaborated on this, saying, “Prices could still see further declines, as was witnessed in March when the indicator hit bottom before bitcoin continued to slide into April. Nevertheless, bitcoin managed to stage a 10% rebound shortly after that initial sentiment low. With sentiment currently at rock bottom once again, a similar short-term rebound could be in the cards.”
At the time of writing, Bitcoin was trading around $84,800, after hitting a low of $80,880 on Friday. Despite a slight bounce, prices are still down 10% for the week and 23% for the month.
The insights from 10x Research paint a picture of extreme pessimism in the Bitcoin market, but also suggest the possibility of a tactical low and a potential price rebound in the near future. Investors will be closely monitoring market developments to see if the sentiment shift translates into a tangible uptick in prices.
