All indications show that Bitcoin has plummeted and is heading towards $50,000 in Q4 of 2024. Analysts say there is no quick recourse in sight and crypto market has entered ‘Extreme Fear’ phase that is likely to have negative repercussions on the entire industry.
According to the Crypto Fear & Greed index, Bitcoin fell to a one-month low of ’22’ on the index, the lowest seen since August this year. As investors and traders try to navigate this development with the growing concern for BTC, the crypto market is currently facing an “extreme fear” situation.
Corrections to Bitcoin have been occurring for a while now. With a market capitalization of $1.01 trillion as of August 5, 2024, it was trading at $50,112- a straight 29.99% downer from its peak. Over the past seven days, Bitcoin has dropped by 27.73%, and it dropped by 16.85% in the last 24 hours. Then again in an instant, it began to descend. Later, it tried to stabilize at roughly $55,444 on August 6, 2024, up 4.25%, as at the time of writing, BTC stands at $54,183.
The recent BTC dip is not the first we have seen in the crypto industry. However, a thorough analysis of current trends and past crypto ‘extreme fear’ trends shows that things are not going to be rosy for BTC in the coming months. In this article we will explores the complex interplay between market sentiment and cryptocurrency market valuations and dissect the phenomenon of “extreme fear’.
Understanding the Fear and Greed Index
The Fear and Greed index in crypto mirrors the current market sentiment. It varies from 0 (the level of Extreme Fear) to 100 (the level of Ultimate Greed). It maintains these cards through copious resources and analysis of BTC performance. The present index amasses facts such as price fluctuations, volatility, volume traded, social volume, social market dominance, and Google search counts.
It is worth mentioning that any “Extreme Fear” score, often set below 20, means that the investors have become too afraid of the market. With the current BTC price, it is considered a good time to purchase as the fear suggests the prices may escalate. This helps investors to gauge market sentiment and make more informed decision regarding the buying and selling of crypto.
Could Bitcoin go below $50,000?
The price of bitcoin is still hovering around $54,000, and it is about to enter a consolidation phase marked by declining volatility. Investor patience has been put to the test during this time as other asset classes, such as US stocks and gold, are very close to or have already reached all-time highs. In the interim, Bitcoin is still more than 20% behind its all-time high.
At 22, the Coinglass Crypto Fear and Greed Index is currently showing a fearful state. The market’s attitude has mostly stayed in this scared range since August. In the last year, there have been two days of intense panic for Bitcoin, most notably on August 5th when the unwind of the yen carry trade caused a sell-off.
All told, there have been 44 days of anxiety, 89 days of neutrality, 215 days of greed, and 15 days of extreme greed for Bitcoin over the last year.
Historically , the past 14 years have also witnessed market sentiments, with just 4 out of the years witnessing extreme fear. According to a table by Coincodex, market sentiments have triggered both bearish and bullish moments over the last 13 years.
Few analysts have made comments on the current trajectory of the Bitcoin price and sentiments. Arthur Hayes, former CEO of BitMEX, was adamant this weekend that the price of Bitcoin could fall below $50,000 within a few days. He even suggested going for a short trade which further illustrated his short-term bearish views on the market.
Similarly, Rekt Capital said that there is a rejection from the third zone and a key resistance zone on the 4-hour chart, which means it is not over just yet, at least in that time frame.
Rekt Capital, note that this drop is consistent with normal price movements that occur after each previous halving bull run in terms of Bitcoin’s monthly September cyclical patterns of sub-10% drops.
Conclusion
All insights and analysis on BTC points towards the $50K barrier and if current market sentiment persists, it is very likely that Bitcoin will dip below $50k in Q4. However, other global events especially the upcoming presidential elections in U.S. can work as a counter-weight to the extreme fear phase.
Also Read: Bitcoin Price May Fall 15-20% Following Rate Cuts this Month
