A group of tenacious Bitcoin investors will not be deterred by Saturday’s 21% drop in a matter of hours.
They’re now promoting a “Fear & Greed” index on Twitter and other social media platforms to back up their assertion that the current price dip is a perfect time to jump on the Bitcoin bandwagon.
Fear-Greed measures in traditional markets are a metric of investor attitude based on elements such as volatility, momentum, and demand. The crypto version, produced by alternative.me, attempts to determine whether traders are too bullish (represented by Greed) or bearish (represented by Fear) and takes into account a variety of other elements like social media trends and Google search phrases.
The index is currently at 25 on a scale of 0 (“Extreme Fear”) to 100 (“Extreme Greed”). Bitcoin was under 80 when it reached a record high of nearly $69,000 last month. At 1:14 p.m. in New York on Tuesday, the largest cryptocurrency was trading at around $51,000.
According to Troy Wiipongwii of William & Mary University’s blockchain research lab, the index, as well as a significantly lower Bitcoin price, indicate that the market is oversold and that prices are about to rebound and go to “the moon.”
Images of the index are going viral on Twitter, with some calling it “sexy” and replacing the word “fear” in the graphic with “purchase.”
Ali Yilmaz is one of the investors who is keeping an eye on the index. The 32-year-old university instructor from Bolu, Turkey, said he plans to add some altcoins to his 10,000 euro ($11,249) portfolio, including Bitcoin, Ethereum, and Ripple.
“Because there is so little information about cryptocurrencies, this ‘Fear and Greed’ index is vital to gain a sense of market sentiment,” he explained, “I buy the fear and sell the greed.”
Bitcoin advocates have previously used a variety of justifications to explain why price declines in Bitcoin are completely natural, such as comparing it to prior bull runs or claiming volatility is in the digital currency’s DNA.
While experts believe the index is a good market sentiment indicator, it has some drawbacks. “Ultimately, no indicator or index can predict market moves perfectly,” Wiipongwii remarked.