With such a huge surge in Bitcoin sentiment lately, there could be a Bitcoin rally.
Bitcoin has been hovering between $30K and $40K for a while now with no real big move either up or down. This came in light of the market Collide Experienced for over a month. The asset lost about 50 percent of its value and many investors were forced to step back and revalue their crypto positions because of this.
Related reading | Hall of Fame investor: Bitcoin is in a ‘bear market’
While significant price drops in a short period of time are not new to cryptocurrencies, they are new to investors who are just getting in. Every bull market, bitcoin sees a huge influx of investors for the first time. most of them FOMOIn the market. As soon as the expected malfunctions start to occur, they get scared and start throwing away their coins.
What could an increased feeling of height mean
With a volatile asset such as Bitcoin, price movements can be linked largely to investor sentiment. Emotions often rule humans, so it’s no surprise that this extends to other parts of our lives such as investing. Feeling positive about something is why so many investors buy assets.
Much of the decision-making process can be attributed to research, but feelings, whether good or bad, can often be a determining factor.
Bitcoin price crashed about 50% in May | Source: BTCUSD on TradingView.Com
Once people start feeling that the market is about to do well, they invest in the market. This, in turn, makes it clear to other investors that people still believe in the program Currency. The cycle continues, leading to a bullish run.
How fear and greed affect market prices
Investors often pay two emotions when they put money in the market; Fear and greed.
When investors are afraid of what an asset might do, it can result in them putting less money in that asset than they normally would. They don’t want to lose their money. It doesn’t matter if there is reason to be afraid of not being afraid. If investors don’t believe in an asset, they won’t put money into it.
Then to greed, this is the ultimate market driver.
The dictionary definition of greed is as follows; An intense and selfish desire for something, especially wealth, power, or food.
Investors are in the market to make as much money as possible in the least amount of time. While sticking long term might be the best move when it comes to investing, it doesn’t change the fact that people want money now. And they want a lot from him.
Related reading | MicroStrategy sells $500 million in notes to buy Bitcoin
This is where greed comes in. The more money you want to make, the more money you have to invest in the market. The more money that is invested in an asset, the higher the value of that asset.
Arcane Research has Fear and Greed Index by which you measure investor fears in relation to greed. He had been in the area of intense fear for a long time. This was in line with market prices. Bitcoin has been in the doldrums for a while. People don’t put money in it.
But a recent indicator from Arcane Research showed that investor sentiment has finally moved from intense fear to fear. This indicates that investors are finally starting to come out of hiding.
Fear and Greed Index up from 13 last week to 38 | Source: Fear and Greed Index on Arcane Research
Lightning Network sets a new record
The Bitcoin Lightning Network surpassed 1500 BTC for the first time ever yesterday on the network.
Speculation indicates that this rise is due to an increase in the number of small bitcoin transactions being made on the network after El Salvador made bitcoin Legal currency.
With such optics and adoption news rocking the space, a market rally may be on the horizon for bitcoin.
Featured image from Forbes, bitcoin chart from TradingView.com, Fear and Greed Index chart from Arcane Research