Bitcoin has been struggling lately and even with the recovery, it is still finding it difficult to hold above the $20,000 level. With the crash, there has also been a significant drop in investor sentiment which has reached some lows in recent years. Even with Bitcoin finally making the coveted recovery above $20,000, investor sentiment seems to be finding it difficult to keep pace as it remains in a negative state.
The market is in great fear
according to Cryptographic Fear and Greed IndexIt is a tool that measures how investors feel about the market, and investors are still very cautious about the market. The index is currently at a level of 11 which means that the market is still in an area of extreme fear.
Related reading | By the Numbers: Worst Bitcoin Bear Market Ever
This comes as no surprise given where the price of the leading digital asset in the space has been. Even profitability has plummeted in this time period, leaving many investors with bags of losses in the market. In addition, multiple events have also played key roles in bringing investor confidence to this point.
Investor sentiment in extreme fear | Source: alternative.me
The first was the collapse of the LUNA that wiped out billions of dollars from the market. Then the leading lending protocol froze withdrawals and transfers, essentially preventing thousands of investors from accessing their funds.
With cryptocurrency locked in on multiple platforms, investors are wary of putting any money in the market for fear of losing it or being locked out of a platform. Thus, the flows into space slowed down markedly, waiting for the feelings to improve.
Where is bitcoin headed?
Bitcoin dropped to $17,600 in its downtrend last week. This was lower than the peak of the previous cycle, which raised concerns among investors that there may be no support. However, the digital asset found support and has since recovered above $20,000 where it is now resting.
However, digital assets continue to suffer. Consolidation above this level was a daunting task, especially with the large resistance that the bears were building at the $21,000 point. Moreover, some in the space are expecting the price of the digital asset to continue declining from this month.
BTC recovers above $20,000 | Source: BTCUSD on TradingView.com
In line with the trend of the halving that Bitcoin has followed since its inception, it may be at least another year before the digital asset recovers towards its all-time high. Looking at historical data shows that the next bull market is likely to start in May 2024, when the next halving will occur.
Bitcoin is now trading above the 5-day moving average for the first time since the crash. However, this does not necessarily mean that an upward trend is underway. Rather, it shows that a certain level of stability is beginning to return to the market.
Featured image from Guardian.ng, chart from TradingView.com
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