The “Fear and Greed” cryptocurrency index has fallen to ultra-bearish levels this week. Is this the signal for a “buy the downside” opportunity?
The crypto “Fear and Greed” index is a complex indicator that tracks volatility, market trading volume, social media discussions, market dominance and Google Trends, and it also displays whether the audience is optimistic or pessimistic about this or that asset.
Extreme fear week
On December 6, 2021, the Bitcoin Fear and Greed Index (BTC) reached the 16/100 level for the first time in nearly five months. Then it rebounded a bit but, on Saturday, it stabilized at this ultra-low level.
As such, Bitcoin (BTC) has failed to leave “Extreme Fear” waters for an entire week. It took only 28 days for the index to plunge from its eight-month high at 84/100.
From a short-term perspective, analysts are certain that the Bitcoin Fear and Greed Index has fallen to ultra-low levels due to Bitcoin’s failure to hold above $ 50,000.
The last time the Bitcoin “Fear and Greed” index was so weak was when the crypto king traded below $30,000 in late July 2021, after the dramatic dropdown of Q2, 2021.
Is ETH / BTC “reversal” inevitable?
The net capitalization of the cryptocurrency market fell below $ 2.5 trillion for the first time since October 15. On November 9 and 10, it managed to stay above $ 3 trillion for two days, which is an all-time high.
Bitcoin (BTC) dominance (BTC.D), a ratio between the market capitalization of Bitcoin and the rest of the cryptocurrency market, inches closer to its seven-month lows.
Although it is also flat, Ethereum (ETH) performs slightly better than Bitcoin (BTC). ETH / BTC ratio printed an impressive rally to 44 month high.
Typically, this combination of trends indicates an upcoming “altcoin season,” i.e., the period during which the major altcoins perform significantly better than the orange coin.
