Bitcoin Sees a Decline in Fear and Greed Index Amid Market Sentiment Cooldown

Bitcoin ($BTC) has seen a considerable dip in Fear and Greed Index. As per the data from Axel Adler Jr., the 90-day simple moving average (SMA90D) has plunged by a 22%, indicating  significant shift in the overall market sentiment. The renowned crypto analyst took to social media to discuss the Bitcoin Fear and Greed Index decrease.

Over the past two months, the 90-day (quarterly) Bitcoin Fear and Greed Index has decreased by approximately 22 percentage points, shifting from the Extreme Greed zone to more moderate levels. If we see a further decline of another 10–15 points in the near future, the market may… pic.twitter.com/ialyw8xd5f

Bitcoin Fear and Greed Index Slumps by 22%, Marking Sentiment Shift

The crypto analyst considers this 22% slump in the Fear and Greed Index of Bitcoin as a sign of a wider sentiment shift. Hence, the overall market sentiment is potentially cooling down while the traders have digested the recent macroeconomic uncertainty and volatility. Moving forward, if the respective trend continues to another 10 to 15 percentage points, this could completely stabilize the market.

Such a decline would reportedly highlight that crypto investors have adapted to the prevailing negative influences. This development would decrease emotional reactions targeting short-term price fluctuations. Based on the present decline rate, the respective transition may take place over a course of upcoming 4 to 6 weeks.

Decline Highlights Potential Accumulation Phase for Traders

In line with the historical statistics, the times of extreme greed normally lead to corrections. This is because undue Optimism can result in overvaluation as well as further sell-offs. On the other hand, when the Fear and Greed Index decreases to neutral levels or fear, it can signify a healthier market reformation. Hence, this provides opportunities for the traders to carry out strategic accumulation.

According to Axel Adler Jr., Bitcoin Fear and Greed Index’s 30-day simple moving average (SMA30D) shows indications of a local bottom. The respective pattern is analogous to former corrections, interestingly when Bitcoin was changing hands around $54,000. If the respective pattern persists, it could denote a stabilization period before the likely price action.