The Crypto Fear and Greed Index has plunged to 30, marking its lowest level in 18 months, as the market panics following the recent price decline.
Most cryptocurrencies traded in the red yesterday after recording massive price declines. While a brief recovery is being seen, most coins have yet to recover to their 7-day highs.
Crypto Fear and Greed Index Drops to 30
The Crypto Fear and Greed Index tracks the sentiments and emotions of traders toward Bitcoin and other cryptocurrencies.
This index is currently at 30, showing investors remain cautious and uncertain of the market’s direction.
The bearish market sentiment comes after widespread panic following news that the defunct Mt.Gox exchange will start reimbursing investors.
The Mt.Gox reimbursements, which will be done in Bitcoin (BTC) and Bitcoin Cash (BCH), are bound to exert selling pressure.
According to analyst DaanCryptoTrades, Bitcoin witnessed the highest net selling day on June 24. The trader opined that BTC’s Relative Strength Index (RSI) dropped to a yearly low due to being oversold.
Bitcoin has recorded a slight gain of 0.2% in the last 24 hours to trade at $61,269 at 06:45 a.m. EST.
The four-hour chart shows buyers have yet to enter the market while the sell-side pressure has cooled. The Relative Strength Index (RSI) at 52 indicates that the buyers and sellers are at an impasse.
Data from Santiment presents the possibility of BTC heading towards higher levels. In a recent X post, Santiment noted that the word “bottom” has spiked to the highest levels, which usually precedes a notable price uptrend.
Long Squeeze Behind BTC Slump
According to analyst Willy Woo, the recent drop in BTC could be attributed to “speculators adding to new long positions.” These positions triggered an increase in liquidations, with long traders forced to sell.
A long squeeze occurs when many investors speculate about a price increase and start selling their holdings as the price drops to close their positions. As futures traders rush to close their long positions, the price of BTC drops even lower.
Data from Coinglass shows that over $75M worth of Bitcoin long positions were liquidated in the last 24 hours.
Market Selloff Triggers Price Dip
Besides the planned sell-off by the Mt.Gox Rehabilitation Trustee, the German government has also been dumping Bitcoin into the market, triggering more price declines.
Data from Arkham Intelligence shows that a crypto wallet linked to the German government sold more than $54M worth of Bitcoin in three transactions.
In two of these transactions, the government wallet sent 200 BTC to Coinbase, a similar amount to Kraken.
The German government wallet still holds 49K BTC, valued at over $2 billion at the current prices. If there is additional selling, the price of Bitcoin could drop further.
Besides selling in the Bitcoin spot market, Bitcoin products are also recording a surge in outflows.
Data from Farside Investors shows that the total outflows from Bitcoin exchange-traded funds (ETFs) have hit $1.29 billion in the last two weeks.
