There have been some ups and downs in the crypto market this year, and market sentiment has fluctuated greatly. Considering the many long runs and the subsequent crashes and declines that plagued the market, investors have experienced an unprecedented year. For some people, this is the best year after portfolio losses in the past three years, while for others, especially those who entered the market at the height of the bull market, it has been a brutal year.
Nevertheless, for all investors, this is a year full of lessons. Turning from incredibly bullish to bearish can help educate investors that it can’t always be dark, and it can’t always be bright. In this report, let’s take a look at this year’s sentiment trends and how sentiments have changed with the market.
Crypto fear and greed index fluctuations
Since entering this year, investor sentiment has been at its highest level. In the field of extreme greed, investors’ increasingly optimistic outlook will play a role in the market in the coming months. Over the past four months, market sentiment has been extremely greedy, and confidence in cryptocurrencies has remained high. However, this will change soon.
The first significant price collapse in the crypto market occurred in May, and market sentiment plummeted. After spending so long in the field of greed, the market sentiment suddenly fell into panic, and investors remained alert to the market. This situation lasted for most of the summer, because the decline in the entire market continued to shock the market, which in turn dragged market sentiment into negative sentiment.
However, in the spring, the market began to rebound again. Emotions slowly and firmly walked out of the realm of fear, into a state of neutrality, hovering between this and greed.
Fear & Greed Index fluctuates widely in 2021 | Source: Arcane Research
As the market plunges into greed again, August will start another period of positive sentiment. Prices subsequently rose, and investors’ favorites hit a record high.
Facts have proved that this situation will not last long, because after the market crash on September 7, market sentiment derailed again and returned to a negative state. The Fear and Greed Index will trend low again until another rebound at the end of September makes it rise again. This time, market sentiment will spend a considerable amount of time in the field of greed and then reverse again.
Related Reading | Bullish signal? Ethereum market dominance is higher than 20%
This year, most experienced investors have used tools such as the Fear and Greed Index to profit from the cryptocurrency market. Therefore, although others are afraid of putting money into the market, these investors have doubled their investment and are seeing returns. Arcane Research Forecast This trend will continue until 2022 and will help investors discover “buy on dips” opportunities in the coming year.
At present, the Fear and Greed Index is at a low trend of around 40, indicating that investors are afraid of the market.
Crypto total market cap crumbles to $2.2 trillion | Source: Crypto Total Market Cap on TradingView.com
Featured image from Institute of Entrepreneurship Development, charts from Arcane Research and TradingView.com