With such a huge surge in bitcoin sentiment recently, a bitcoin rally could be underway.
Bitcoin has been fluctuating between $30k and $40k for some time now with no real significant movement either up or down. It has come to the light of the market Accident Experienced more than a month ago. The asset lost nearly 50 percent of its value and caused many investors to take a step back and reevaluate their crypto position.
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While a sharp drop in prices in the short run is not new to crypto-natives, it is new to investors who have just arrived. Every bull market, bitcoin sees a large influx of first-time investors. most of them FOMO-in the market. Once the expected mishaps start happening, they get scared and start getting rid of their coins.
What can an increased bullish sentiment mean
With volatile assets like bitcoin, price movements can be heavily linked to investor sentiment. Human beings are mostly governed by emotions so it is no surprise that it spreads like an investment in other parts of our life. Feeling very positive about something is one reason many investors buy property.
A great deal of decision-making can be attributed to research, but emotion, good or bad, can often be a deciding factor.
Bitcoin price crashed about 50% in May | Source: BTCUSD on TradingView.Com
Once people feel that the market is going to do well, they invest in the market. This in turn shows other investors that people still believe in it. coin. And this cycle leads to the Bull Run.
How Fear and Greed Affect Market Prices
Investors are mostly driven by two emotions when they are investing in the market; Fear and greed.
When investors are afraid of what an asset might do, it can cause them to invest less money in that asset in general. Don’t want to lose your money. It doesn’t matter if there is reason to be afraid or not. If investors do not have confidence in an asset, they will not invest money in it.
Then for greed, it is the ultimate market mover.
The dictionary definition of greed is as follows; An intense and selfish desire for something, especially money, power, or food.
Investors are there to make money in the market, in the shortest amount of time possible. While investing for the long term may be the best move in terms of investment, it does not change the fact that people want money now. And they want a lot.
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This is where greed comes in. The more money you want to make, the more money you have to put into the market. The more money invested in a property, the higher the value of that asset.
mysterious research is one Fear and Greed Index with which it measures investors’ fear relative to greed. And it has been in extreme fear territory for quite some time. This is in line with the market price. Bitcoin has been stagnant for a while. People are not investing money in this.
But a recently released index by Arcane Research showed that investor sentiment has finally shifted from extreme fear to fear. This signals that investors are finally starting to come out of hiding.
Fear and Greed Index up from 13 last week to 38 | Source: Fear and Greed Index on Arcane Research
Lightning Network sets new record
Bitcoin surpassed 1,500 BTC for the first time yesterday on the Lightning Network network.
There is speculation that this spike is due to an increase in the number of small bitcoin transactions being conducted on the network after El Salvador made bitcoin one. legal tender.
With the space bustling with such optics and news of adoption, a market rally for bitcoin could be in the horizon.
Featured image from Forbes, bitcoin chart from TradingView.com, Fear and Greed Index chart from Arcane Research