Bitcoin (BTC), which has fallen nearly 20% from its all-time highs, is now affecting market sentiment. Investors are now “afraid”.
The Crypto Fear & Greed Index found that overnight losses on Nov. 19, removed any traces of “greed” from traders’ minds.
In two days, “greed” has been transformed into “fear”.
BTC’s price action fell this week and sentiment caught up as spot prices mirrored bullish signals from the markets.
Some derivatives traders still believe in dramatic price rises in the near future, even though they were in an exuberance phase.
The Crypto Fear & Greed Index now measures overall sentiment more closely than before.
The Index was at 34/100, which is a description of “fear”, as it had dropped 20 points overnight.
This sharp drop contrasts starkly with the Index’s behavior over the past two months, when it remained in “greedy” territory at the low 70s.
Investors are therefore at their most anxious since September, right before Bitcoin surged to new all-time highs.
Crypto Fear & Greed Index. Source: Alternative.me
Old hands are strong
Investors may be more afraid than others.
Related: Bitcoin prices hover at $56K, as whales continue to buy — Check out these BTC price levels
Cointelegraph pointed out that whales are accumulating despite falling prices. However, there is a distinct difference between the old and the new hodlers.
Figures showing the current profit margin for BTC supply are a good example of this.
Glassnode, an on-chain analytics company, noted that long-term holders (LTH), have been selling very little in recent times and only 3% of the supply. This is not profitable.
The brunt of the selloff has been suffered by short-term holders (STH), which are coins that have not moved for the past 155 day.
Glassnode tweeted Friday that “STHs who purchased the top currently own the majority of all BTC, at an unrealised loss,” he wrote.
Source: Glassnode. Profit/loss chart. Glassnode
Eileen Wilson –Technology and Energy
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