Recent Crashes in Bitcoin and Cryptocurrency Market
Recently, the sudden crash in Bitcoin and the general cryptocurrency market has caused prices to quickly turn red. This situation has generated significant concern among investors, causing the “Fear and Greed Index” to drop to an extreme fear level. Investors have become more cautious about reinvesting in the market. However, despite this negative picture, there may also be some positive developments for the market.
Cryptocurrency Fear and Greed Index: In Extreme Fear
The Bitcoin Fear and Greed Index is considered one of the most reliable indicators measuring investors’ sentiments about the market. This index analyzes investor sentiment using a scale from 1 to 100. This scale represents different levels such as Fear, Extreme Fear, Neutral, Greed, and Extreme Greed. The level of the index indicates how investors approach the market, while also providing clues about which direction Bitcoin prices may head in the future.
Generally, when the Fear and Greed Index is at extremes, the likelihood of prices moving in the opposite direction increases. For example, if the index is in the extreme greed zone, this may indicate that Bitcoin prices could drop. Similarly, if the index is in the extreme fear zone, it could signal that prices might rise.
In this context, the current status of the Bitcoin Fear and Greed Index being in the extreme fear zone could create a potential positive development for Bitcoin prices. The index dropped to 22 last Friday, indicating that the market is in a state of intense fear. According to historical data, it is likely that Bitcoin prices tend to recover during periods when the index turns red. For example, during a period in August when the index fell to 20, there was a rapid recovery in the crypto market. If a similar recovery occurs, it is possible that Bitcoin prices may enter an upward trend in the coming period.
Will Bitcoin Prices Recover in September?
Although the drop of the Fear and Greed Index into the extreme fear zone may be a sign that prices could find a bottom, it is not expected that this recovery will happen immediately. The most important reason for this is that September historically tends to be a bearish month for the cryptocurrency market. Looking at past data, it can be seen that Bitcoin prices generally perform negatively in September.
Experienced analyst Benjamin Cowen noted in a post on the social media platform X (formerly Twitter) that this September is also consistent with previous years. Cowen emphasized that Bitcoin prices decreased by 8.16% throughout September, making it one of the worst Septembers in the last five years. Except for 2019, when Bitcoin prices dropped by 13.91%, it is possible to consider this situation as typical performance for September.
