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Recent fears of a potential $8.5 billion Bitcoin market dump by Mt. Gox and significant outflows from United States spot Bitcoin ETFs have led to a weakened market sentiment.
Crypto Fear and Greed Index Hits 18-Month Low
The Crypto Fear and Greed Index, which measures market sentiment for Bitcoin (BTC) and the broader cryptocurrency industry, has plummeted to its lowest score in nearly 18 months. On June 24, the index dropped 21 points, plunging into the "Fear" zone. This marks one of the most significant day-to-day declines in recent years.
The last time the index was in the Fear zone (with a score between 24 and 50) was around seven weeks ago, on May 3. It hasn't fallen below 30 since January 11, 2023, when Bitcoin was trading at $17,200, just two months after the collapse of the crypto exchange FTX. Just a week ago, the score was 74, indicating "Greed."
Bitcoin Price Decline
Bitcoin is currently trading at $61,332 after hitting a seven-week low on June 24. Negative sentiment has been exacerbated by over $1 billion in outflows from spot Bitcoin exchange-traded funds over the last ten trading days. Additionally, news that Mt. Gox might be preparing to sell $8.5 billion worth of Bitcoin to its creditors and Germany's decision to sell some of its Bitcoin reserves have further dampened market sentiment.
Market Overreaction?
Despite the prevailing negative sentiment, an executive at cryptocurrency investment firm Galaxy Digital believes the market may be overreacting to the Mt. Gox concerns. Meanwhile, Bitcoin miners have been selling off more Bitcoin than usual amid a declining network hashrate, contributing to the weakening market sentiment.
How the Crypto Fear & Greed Index Works
Crypto Fear & Greed Index fluctuations reflect market sentiment.
The Crypto Fear & Greed Index takes into account various factors, including market volatility (25%), trading volume (25%), Bitcoin’s dominance (10%), and trends (10%). Although it used to factor in surveys (15%), this metric is currently paused. Since reaching a score of 90, indicating "Extreme Greed" on March 5, when Bitcoin surpassed its previous all-time high of $69,000 set in November 2021, the index has been trending downward.
Current Bitcoin Trading Status
At the time of publication, Bitcoin was trading at $61,332, reflecting a 2.16% decrease over the past 24 hours.
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