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Analysis: Market in Extreme Fear or Signaling Approach of a Temporary Bottom

BlockBeats News, February 17th, according to Cointelegraph, the current crypto market sentiment has dropped to a "state of extreme fear," possibly nearing the formation of a "lasting bottom," where selling pressure may be gradually exhausting.


The Bitcoin "Fear and Greed Index" shows that when the 21-day moving average falls below the zero axis and then turns back up, it often corresponds to a temporary bottom, and a similar signal has now appeared. This typically indicates a weakening selling momentum and the beginning of a more stable market condition. However, the institution also warns that in the short term, prices may still experience further downward pressure. Nevertheless, historical experience indicates that the range of extreme negative sentiment often provides a relatively attractive entry point.


At the same time, the "Fear and Greed Index" compiled by Alternative.me has a reading of 10 (out of 100), in the "extreme fear" range, marking a low not seen since June 2022. Frank Holmes, Chairman of Hive, stated that the current Bitcoin price is about two standard deviations below its 20-day moving average, a situation that has only occurred three times in the past five years. Historical data shows that in similar extremely oversold environments, a technical rebound is more likely to occur in the following 20 trading days.


If Bitcoin closes lower in February, it will mark the fifth consecutive monthly decline, one of the longest such declining streaks since 2018. The market is watching whether extreme sentiment and technical oversold signals will together drive the formation of a new inflection point.

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