Urian B., Tech Times
Remember when the price of Bitcoin was sitting at $69K? As of press time, BTC is now almost half its all time high with its fear and greed index dropping to just 11 as the market moves into a state of extreme fear at a price of $36,312.
Bitcoin ‘to the Moon?’
Although a lot of people believed that Bitcoin would hit $100K “for sure,” it never really did and there could be a profound reason as to why this happened. Throughout 2021, a lot of people were discovering BTC and crypto with more and more companies and even institutional money coming in.
The highlights of 2021 included the release of actual exchange traded funds (ETFs) that included Bitcoin and cryptocurrency in general with the country El Salvador deciding to choose BTC as its legal tender. The price, however, has fluctuated quite a lot.
Only Two Bitcoin ETFs Successful
As of press time, there are still a lot of investors trying to get into crypto but have seen rejection. Such is the case with Anthony Scaramucci’s Bitcoin ETF, which was blocked by the Securities and Exchange Commission (SEC), according to a report by CNN.
It should be noted that this is not the only time that the government has decided to reject Bitcoin ETFs.
Another instance is with SkyBridge as the US SEC decided to reject their Bitcoin ETF. As of writing, however, only the ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF have been approved.
Bitcoin Fear and Greed Index Shows Market at Extreme Fear
Currently, the Bitcoin Fear and Greed Index has dropped massively and, although the market has slowly gone back to the state of neutral when the price of BTC dropped from $69K to around $46K, the price dropped once again, breaking support and is now at $36,312.
The market is currently in the state of extreme fear at 11 out of 100. To put into perspective just how fearful the market is, when Bitcoin skyrocketed to $69K, the market was in a state of extreme greed.
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Principle of Buying Low and Selling High
Now, the market is far away from that sentiment, which could point towards more sales happening. Generally, when the market is in a state of extreme fear, a lot of retail investors usually sell at a loss. This pushes the price down even further.
Once the price starts to stabilize, which has to be observed over a certain period of time, this is when smart money comes in once again to invest and start bringing the price up. The whole crypto market cycle should be read from an investor’s point of view following the basic principle of buying low and selling high, according to Investopedia.
This sentiment also includes buying when the market is at a discount and selling when the market is oversaturated. This may be rather hard since you are betting against the market, but this is often where a lot of people lose big while the winners win big.
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Written by Urian B.
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