Bitcoin Investors Have Become Less Fearful After the May Crash
Since the price of BTC crashed by 60%, from $50,000 to $30,000, the general sentiment in investors has come down to neutral levels. In addition, The Fear and Greed index has returned to a less fearful state.
The Fear and Greed index is a popular tracking website that calculates multiple data kinds, such as volume, social media, surveys, and volatility. It thereby gives the general feelings of investors in the current landscape of the BTC market.
The price of the significant cryptocurrency saw its most significant USD collapse in mid-May. Negative news from Tesla, Elon Musk, more FUD from China, and overpowered holdings culminated in nearly 20,000 dollars evaporating from the prices of BTC as the asset fell to 30,000 dollars.
Of course, such undesirable trends in the volatile crypto realm brought fear and panic. But, like the circumstances after the market dump in March 2020, the overall feeling fell to an annual low. But bitcoin began to rebound a little quicker. The cryptocurrency increased by more than 30 percent and has lately recovered 40,000 dollars in just one month.
According to CryptoQuant, the sentiments of crypto traders have also normalized. To reach this result, the analytics company investigated different in-chain metrics.
The first such comment came from all funding rates between exchanges of cryptocurrencies. CryptoQuant notes that traders believe that the market is bearish and vice versa if these deposits are in a negative area. In fact, in the middle of May, it was much under 0. However, in the past several weeks, it has normalized around 0.
Still in a Bubble?
Due to its tremendous volatility and regulatory uncertainties, crypto as a viable asset class remains skeptical. There have been global crackdowns on cryptocurrencies, with central banks and regulators voicing worry in China, Turquie, and Denmark.
In Great Britain, the financial watchdog, the FCA, cautioned in early June about the failure to meet the requirements under Money Laundering Regulations by many cryptocurrency companies. It means that some might have to close.
Further regulation is perceived as a danger to crypto decentralization, which affects pricing. As a result, some investors are still fixed to believe that cryptocurrency is still in a bubble despite the market crash.
Even if prices have collapsed, the emerging asset class still occupies investment banks. For example, Goldman Sachs Group Inc. has stated that the company plans to implement Ethereum-based derivatives for customers, while Cowen Inc. aims to provide cryptocurrency institutional custodial services.
Last week, prices were boosted with Paul Tudor Jones, a senior hedge fund manager, reiterating Bitcoin’s position on a positive inflation backdrop. Everybody asks me what I should do with my Bitcoin? The only thing I know indeed, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities, he said.