BTC fear greed index hits 18-month low, is the bottom signal showing?

Original author: BitPush

On Tuesday, Federal Reserve Chairman Powell's positive attitude towards improved inflation prospects eased market jitters. After Powell's speech, traders raised the probability of a rate cut in September from 68% last week to 73%, but remained cautious ahead of this week's consumer price index (CPI) and producer price index (PPI) reports.

According to Bitpush data, the total market capitalization of Cryptocurrency pumped 2.5%. The bulls and bears are competing, and the bulls pushed BTC from a daily high of $56,700 to $58,312. At the time of writing, the BTC trading price is $57,804, with a 24-hour increase of 2.19%.

Most of the AltCoin market has rebounded, with about 90% of the top 200 Tokens by Market Cap pumping.

Mog Coin (MOG) has the highest increase, about 18.1%, followed by Sei (SEI) pump 17%, Celestia (TIA) pump 16.8%. aelf (ELF) has the largest decrease, down 6%, Pepe (PEPE) down 4.4%, Axelar (AXL) down 3.5%.

Currently, the overall Market Cap of Cryptocurrency is 2.12 trillion US dollars, with BTC's market share at 53.7%.

At the close of the US stock market, the S&P 500 index and the Nasdaq 500 index pumped 0.07% and 0.14% respectively, while the Dow Jones index fell 0.13%.

The BTC fear and greed index fell to its lowest level since January 2023

According to Glassnode data, the BTC Fear and Greed Index (an indicator that tracks relative market sentiment) has fallen to its lowest level since January 2023, falling to 27 on July 9th.

The low level of the index indicates that investors are pessimistic, while the high level indicates a hot market, and investors are afraid of missing out on profit opportunities.

January 2023 is only two months after the Cryptocurrency exchange FTX collapsed. At the beginning of the month, the Cryptocurrency Fear and Greed Index was 26, and the trading price of BTC was about $16,500. Then it rebounded to about $22,000 by the end of the month.

Some analysts believe that the recent correction may be attributed to the panic caused by the German government's sale of more than $3 billion worth of BTC that was previously confiscated, as well as the Mt.Gox debt repayment. The repayment amount of BTC from Mt.Gox is close to $8 billion, and although the time is still uncertain, creditors may choose to hold rather than sell in the market. At the same time, as of July 9th, more than 50% of the 50,000 BTC in the German government's wallet has been transferred to an exchange.

Markus Thielen, founder of 10x Research, said in Tuesday's market update that the pump momentum of BTC may continue for a while, possibly reaching $60,000. However, this pump will be short-lived, and a tactical bullish rebound is not expected in the short term.

He added: "We expect BTC to rebound to nearly $60,000 and then fall again to a low of $50,000, creating a complex trading environment."

K 33 Research senior analyst Vetle Lunde pointed out on Tuesday that the seasonal trend also does not help BTC. Historically, the third quarter has often had the lowest return.

He added that the seasonal weakness, combined with the German government's sale of seized assets and the ongoing distribution of Mt. Gox refunds, has put pressure on prices. According to K 33 Research's estimate, it is expected that these selling pressures will have an impact on the trend in the coming months, and the market Fluctuation will continue until October.

Signs of a Turnaround

At a time when the market is declining, technical and fundamental analysts have provided some insights into the next trend.

According to CryptoQuant analyst Crypto Dan, BTC Puell multiple "is usually suitable for finding the bottom of Bear Market, but it can also predict the end of the adjustment period in Bull Market."

He explained that the area circled in red in the above chart indicates the situation where the Miner's profitability rapidly declines and the Puell Multiple indicator big dump during the Bull Market cycle. This indicator has dropped significantly in the Bull Market cycles of 2016 and 2020, followed by a strong pump in BTC.

Crypto Dan said, "Currently, similar trends have been observed, although it is difficult to determine the exact end time of the adjustment period, it can be expected that it won't be too far. We are likely to see a Bull Market recovery in the third quarter of 2024."

After BTC recently fell below $55,000, Crypto General, a market analyst in the encryption industry, pointed out on X platform that a "double bottom" pattern is forming and predicted that it will rebound to $64,000 in the short term. He believes that in order for BTC to continue its upward trend, it needs to maintain support at the 4h 50 EMA level, which is currently near $58,000.