The crypto market is in full fledged fear for the longest phase in more than a year, coinciding with a massive Bitcoin drop of more than 50%.
The once trending cryptocurrency has yet to recover, leaving the market and participants in a state of extreme fear. But past data shows, fear is often a good thing for Bitcoin, and helps the asset find support and at least a short term bottom.
Bottom Things: Bitcoin Price Action Perfectly Correlates To Fear And Greed
Fear is one hell of an emotion and can make even so-called “diamond hand” Bitcoin holders panic sell. No emotion comes close to driving humans toward acting irrationally more so than fear, other than greed.
Greed can be even worse, blinding investors and traders to what’s going on around them. When money is easy, it is difficult to click that sell button and secure profit knowing that prices could rage on much higher.
Related Reading | Bitcoin Bulls And Bears Alike Beware Of Potential Pump And Dump Fractal
The two emotions are almost never in balance when it comes to markets, which makes changes from one extreme to another especially notable.
Several investing legends have made their names and built their reputations based on contrarian positions, and there’s a reason for it that couldn’t be any more obvious than comparing the crypto market Fear and Greed Index with Bitcoin price action.
Fear and green correlates well with tops and bottoms | Source: BTCUSD on TradingView.com
The One Simple Trick To Regular Crypto Investing Success
Be fearful when others are greedy and greedy when others are fearful. Buy the blood in the streets. All of these famous finance quotes directly reference contrarian trading. Why then, can’t anyone simply just control their emotions, and buy when things get scary and sell when others are screaming on social media about their gains?
The crypto market Fear and Greed Index compared with Bitcoin price action shows just how this “one simple trick” actually works and can…