The Bitcoin (BTC) fear and greed index has plummeted to 10, marking its lowest level since June 2022. This indicates extreme fear among investors, but some experts view it as a potential buying opportunity.
The fear and greed index, which assesses market sentiment, was at a neutral level of 49 last week but has now dropped to 10, signifying intense fear among investors.
Whales Buying Newcomers Selling
According to Alternative.me, such conditions typically reflect excessive worry and can present a buying opportunity. However, analysts remain divided in their outlooks.
Some, drawing on historical data, believe that extreme fear often precedes a price rebound. Yet, figures like Arthur Hayes, founder of BitMEX, have warned that Bitcoin’s price could fall as low as $70,000.
Price Drop and Market Impact
Last week, Bitcoin’s price fell from around $99,000 to below $84,000, currently trading in the $85,000 range. This decline has severely impacted the broader cryptocurrency market, causing the value of many altcoins, including Ethereum, Solana, and Binance Coin, to drop significantly.
As a result, the total market capitalization of cryptocurrencies has fallen below $3 trillion, with approximately $200 billion wiped off in a single day. Additionally, over $1 billion in leveraged trading positions has been liquidated.
Bitcoin Whale Awakens
In the middle of the price drop, a prominent whale known as Spoofy purchased over $340 million worth of Bitcoin on the Bitfinex exchange. This whale, known for making large and influential trades in the past, bought 4,000 BTC in the $82,000 to $85,000 range.
In 2022, during a severe market downturn, Spoofy bought 70,000 BTC in the $40,000 to $16,000 range. In 2023 and 2024, the whale sold holdings in the $40,000 to $70,000 range. Earlier this year, before Bitcoin’s price growth, Spoofy bought 24,000 BTC and sold during the subsequent upward wave.
Contrasting Behaviors of New and Experienced Traders
Unlike experienced traders like Spoofy who capitalize on price drops to buy more, novice investors often panic and sell their assets at a loss during such times.
Data from CryptoQuant indicates that many sellers in the current climate are new traders. Ki Young Ju, founder of CryptoQuant, emphasized that a 30% correction in Bitcoin’s upward trend is normal, drawing a comparison to the 2021 market.
In 2021, Bitcoin’s price initially dropped by 53% before reaching a new all-time high.
Conclusion
While fear grips the market and the fear and greed index is at its lowest, some professional traders like Spoofy are buying more. History has shown that such conditions can present a favorable entry point for investors. However, newcomers often make impulsive decisions in these situations, leading to significant losses.
Ultimately, the overall market trend suggests that short-term volatility is predictable, but investors should approach market analysis with a long-term perspective.
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