Bitcoin (BTC) has stabilized at around $55,000 after dropping by $6,000 in a single day — but crypto market sentiment is still in shock.
According to the Crypto Fear & Greed Index, as of Nov. 27, emotions are now at the most fearful since late September.
Crypto sentiment dives into “extreme fear”
Fear & Greed, which takes a basket of factors to compute a standardized sentiment score for crypto markets from 1-100, currently sits at 21.
Friday took its toll on the metric, the score more than halving in 24 hours from its previous position of 47.
Those two readings correspond to sentiment going from “neutral” to “extreme fear” — missing out the “fear” zone altogether.
While an expected reaction, the upheaval apparent the emotional state of market participants is becoming a source of amusement for some familiar names.
Investor and entrepreneur Alistair Milne noted that “extreme fear” is hardly an appropriate reaction to BTC/USD trading at $54,000. Indeed, the last time that the Bitcoin spot price was at those levels in mid-October, Fear & Greed measured 78 — “extreme greed” territory.
“This much fear and we are at $54k. Wild,” he summarized.
On Sept. 30, when the Index last hit 21/100, BTC/USD traded at around $43,800 on Bitstamp.
Funding rates see overnight reset
As Cointelegraph reported, the latest and deepest phase of the BTC price correction came as trader habits on exchanges stayed curiously optimistic.
Funding rates, being positive despite Friday’s move, showed that market expectations were for a swift recovery.
Related: Bitcoin reverses ‘bear market’ at $53.5K as Pfizer gains on fresh panic over coronavirus ‘Nu’ variant
At the time of writing on Saturday, however, it seems that the trip to lows of $53,500 was enough to reset the mood — funding rates are now back to normal and show no bullish bias.
As noted by analytics firm Delphi Digital this week, however, funding remains lower relative to the first half of 2021 — and this may signal a lack of overall direction.
“Funding rates continue to be low on the futures markets. This could be a sign that the shorter-term leveraged traders are still undecided directionally,” researchers told Twitter followers.
“Looking back at the start of the year, the bullish run-up has been accompanied by a significantly higher funding rate.”
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