Sentiment in the cryptocurrency space has plunged to its lowest level in more than a year after the price of the flagship cryptocurrency Bitcoin (BTC) failed more than once to retake the $60,000 level after dropping to a $53,000 low last week.
The Crypto Fear & Greed Index, which serves as an aggregate for investor confidence and attitude towards the market, has entered “extreme fear” territory for the first time since January 2023 and is now at 25, down from over 72 last month.
Crypto analyst Justin Bennett with a following of over 111,000 on social media, pointed to Bitcoin’s repeated rejection at $60,000 as a worrying sign, suggesting a potential price decline in the coming days, as first reported by Cointelegraph.
The price of Bitcoin plunged amid an aggressive sell-off earlier this month over a confluence of factors that included Bitcoin miners having to reduce some of their BTC holdings after the halving event in April, the German government heavily selling, and defunct cryptocurrency exchange Mt. Gox starting creditor repayments.
Bitcoin plunged to a low just above the $53,000 mark before recovering and is now trading at $57,200 after twice failing to surpass $60,000 over this past week. It’s worth noting, however, that Germany’s Bitcoin fire sale is nearing its end, as its stash was originally of nearly 50,000 BTC seized from the operators of a film piracy platform, but of those 40,000 have already been sold.
Some experts predict Germany could exhaust its entire Bitcoin stash in the near future if the current selling pace continues. The government’s decision to sell has drawn criticism from Bitcoin proponents within the German parliament, who argue that the government should hold onto the scarce digital asset instead of converting it to euros.
Notably a Bitfinex report has suggested that “a potential local bottom has been reached.” The report noted the market is now realizing that while the German government is selling large amounts of BTC, these funds are a “relatively small number” as a proportion of all the BTC bought and sold since last year.
The firm also noted that volatility metrics are showing signs of stabilization. The narrowing spread between implied volatility and historical volatility suggests that the market anticipates a period of greater stability going forward. This implies that Bitcoin’s price may range around its current levels or experience less dramatic declines, the firm said.
Featured image via Pixabay.
