Bitcoin and the broader crypto market took a hit over the last day, leading to bitcoin falling below $20,000 for the first time in two months. This decline was followed by a tremendous plunge in investor sentiment. The sharp decline saw sentiment drop to negative levels not seen since January.
Crypto Fear & Greed Index Sitting In Fear
For the last two months, the market was able to recover to as high as $25,000 at one point, leading to a recovery in investor sentiment. As a result, the Crypto Fear & Greed Index moved into the greed territory briefly but all of this has come to an end with the most recent plunge.
The index saw a 10-point drop in a single day, one of the sharpest declines recorded in the last year. Sitting at a score of 34, it shows that investors have once again turned very bearish. The result of this is panic sell-offs as participants in the space try to avoid further losses.
It is a long way from last month’s greedy market which peaked at 62 on the index. The last time the market saw such a sharp decline was in May 2022 following the Terra (LUNA) network collapse.
Is The Bitcoin Bear Market Back?
Looking at historical data, it is possible to deduce that the bear trend will continue from here. As mentioned above, the last time the Crypto Fear & Greed Index saw such a sharp decline was when LUNA collapse, triggering a decline in the price of bitcoin from above $30,000 to below $20,000.
If this happens to be a repeat of the previous trend, then bitcoin could continue declining. It is even possible to see another decline below its current cycle low of $15,500. If this happens, the market bottom may be farther away than expected.
Interestingly, net flows for the past day have come out to be almost neutral for the top digital assets in the space. According to a Glassnode report, bitcoin exchange inflows came out to $782.9 million versus $796.6 million in outflows leading to negative $13.7 million in net flows. Ethereum recorded the same trend with net flows coming out to negative $29.6 million after all was said and done.
Daily On-Chain Exchange Flow#Bitcoin $BTC
$782.9M in
$796.6M out
Net flow: -$13.7M#Ethereum $ETH
— glassnode alerts (@glassnodealerts) March 10, 2023
Historically, it has always been more favorable to enter the market when the majority are scared to do so. This could mean that the current downtrend poses a buying opportunity for investors who are looking to get in at low prices.
At the time of writing, Bitcoin is still trending below $20,000. It is changing hands at just above $19,900, down 8.21% in the last day and seeing losses of 11.16% on the weekly chart.
