Just 72 hours ago, Bitcoin investors were bullish. After remaining in the low-$10,000s for a number of days, the cryptocurrency suddenly broke out, moving past key resistances. It even tapped $11,000 after a surge of buying pressure.
This surge higher made some analysts bullish, as the reclamation of $10,800 and other key technical levels was a positive sign.
But, the party quickly ended, with there being a massive sell-off on Tuesday as bulls failed to keep up the pace. As of the time of writing, Bitcoin has slipped under $10,000 once again, failing to remain in the five digits. The cryptocurrency is down some 4% on the day.
According to the Bitcoin Fear and Greed Index, this sudden reversal has resulted in a reading of five — the index’s lowest value in its history. This is crazy, especially considering that BTC is trading over 300% higher than its bottom price of $3,150.
— CryptoHamster (@CryptoHamsterIO) August 22, 2019
While the index’s reading may seem entirely arbitrary — just look at the bullish momentum Bitcoin has experienced in the first half of 2019 — the index is backed by data.
The website that hosts the index claims it analyses a fair mix of volatility, market momentum and volume, social media trends, surveys, dominance, and Google Trends to get the gist of how cryptocurrency investors are faring.
Related Reading: Bears in Charge as Bitcoin Price at Risk of November 2018 Style Dump
So, to put it short and sweet, the crypto community is more fearful overall than they were during December’s infamous capitulation event.
Can the Bitcoin Price Bounce?
This may leave you wondering, is there any hope for Bitcoin bulls? Can the cryptocurrency market bounce from this unfortunate sell-off?
Well, according to the Fear and Greed Index itself, it’s possible. A description of the index reads:
“The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers… Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.”
Indeed, the last time the index had encountered readings in the high-single digits, Bitcoin bounced higher in the weeks that followed. In fact, when this indicator last was around eight to ten in December, BTC gained 20% in the weeks that followed.
Not many analysts are expecting this though. Analyst Chonis Trading recently pointed out that the daily Heikin Ashi candles are currently showing that BTC is in a bearish trend.
$BTC – Daily “Heikin Ashi” flipped back to bearish after the highlighted trend reversal candle failed to follow through after just two candles of green closes, a tight body candle close is what the bulls want to see, right now very wide…#bitcoin pic.twitter.com/f1piqSOOD0
— Chonis Trading- (@BigChonis) August 22, 2019
Another analyst echoed the idea that the bullish trend has been broken, writing that “BTC has broken its bullish trend and was then rejected from regaining that same trend.
Unless Bitcoin reclaims some key technical levels soon, bears may maintain control of the cryptocurrency market for now.
Featured Image from Shutterstock. Chart Courtesy of Tradingview.com
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