Sentiment around the crypto market had been on the rise when the price of Bitcoin and Ethereum had picked up some momentum. Both of these digital assets had been able to reach a new two-month high following the surge in prices. This resurgence quickly saw positive market sentiment erode over negative and pushed the Fear & Greed Index close to “Greed.” However, before the market could enter this green territory, the retracement began.
Crypto Market Shies Away From Greed
The recovery in price had put the market sentiment on a positive path that it had not seen in a while. The optimism had grown so quickly that the Fear & Greed Index had seen more than 30 points added during this time period. What this meant was that the market had been able to clear out of the “Extreme fear” territory and traverse into the higher end of fear.
Slowly but surely, the index had seen the recovery inch it closer to greed. At its highest, it had reached a score of 44 on the index, only 6 points shy away from “Greed.” This was when the price of bitcoin had been trading close to $25,000, and Ethereum had beat $2,000.
Expectations were that this trend would continue, and the market would finally find itself once more in greed. But that would prove not to be the case this time around. After touching a new 4-month high of 44, the market had quickly retraced and, with this retracement had come to a reversal in investor sentiment.
Market retraces before hitting "Greed" | Source: Arcane Research
Presently, the Fear & Greed Index is sitting at a score of 41, still in the “Fear” territory. This comes as Bitcoin has made its way back below $24,000, and Ethereum threatens to drop below $1,800.
Bitcoin, Ethereum May See Recovery
Now, the recent retracement in the market has not been significant by established margins. Bitcoin lost about $2,000 off the top of its value, and Ethereum lost a couple of hundred dollars. The fact that both digital assets have been able to find support during this drop shows that there is still much more momentum than expected.
BTC declines below $24,000 | Source: BTCUSD on TradingView.com
Additionally, the market has been pumping off the news of the upcoming Ethereum Merge. The upgrade is still about a month away, and anticipation continues to mount. So going by what the market has recorded in the last couple of weeks, the recovery is likely not over.
A small retracement is not out of the ordinary following periods where cryptocurrencies have returned double-digit gains. A correction is often good for the market, contrary to popular belief. Both these digital assets also continue to trade high above their 50-day moving average. This indicates that another bounce might be coming for the market.
Featured image from crosswalk.com, charts from Arcane Research and TradingView.com
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