As the year 2024 comes to a close, the crypto market is experiencing a slump in the price of Bitcoin (BTC), which has dropped by 13.7% in the last 12 days. This decline has led to a significant drop in the Crypto Fear & Greed Index, an indicator that tracks market sentiment toward Bitcoin and other cryptocurrencies.
The Current State of the Market
According to the latest update from CoinGecko on December 30, the Bitcoin price is currently around $93,000, which is significantly lower than its peak in November. The Crypto Fear & Greed Index has dropped back to October levels, clocking a score of 65, which is still within greed territory but the lowest since October 15.
A ‘Huge Dump’ Amid Flock to Stablecoins
The decline in the price of Bitcoin has led many traders and analysts to warn of a significant correction. The trend of investors moving to stablecoins has further exacerbated this situation, leading to a "huge dump" in the market.
The Crypto Fear & Greed Index: A Tool for Tracking Market Sentiment
The Crypto Fear & Greed Index is calculated based on signals that impact traders’ and investors’ behavior. These signals include:
- Google Trends
- Surveys
- Market momentum
- Market dominance
- Social media
- Market volatility
Calculating the Index
The index is calculated by analyzing these signals to determine market sentiment. The scores range from 0 (extreme fear) to 100 (extreme greed).
Analyzing the Trend
The Crypto Fear & Greed Index has consistently stayed above 70 through November and December, after President-elect Donald Trump won the United States election and many pro-crypto politicians won seats in the Senate and House of Representatives.
A ‘Timed Parabolic Move’ Leading Up to the Trump Inauguration
Markus Thielen, analyst and head of research at 10x Research, has a different perspective. In a report on December 29, he stated that some analysts have been predicting a "timed parabolic move leading up to the Trump inauguration," followed by a significant correction.
Volatility to Increase Soon
Thielen expects volatility to increase soon and has warned investors of potential losses in the market. This warning comes as many investors are holding onto their crypto assets, waiting for a better opportunity to sell.
Veteran Trader Peter Brandt Predicts Bitcoin Price Movement
In a post on X on December 28, veteran trader Peter Brandt speculated that Bitcoin could be moving to a Hump Slump Bump Dump Pump pattern. The sequence suggests a price movement with an initial rise (hump), followed by a decline (slump), a subsequent recovery (bump), a further drop (dump), then a rebound (pump).
CryptoQuant Founder and CEO Ki Young Ju Agrees with Brandt’s Prediction
CryptoQuant founder and CEO Ki Young Ju shared Brandt’s post and said he agreed with the pattern. This prediction has sparked interest among investors, who are waiting to see how the price of Bitcoin will move in the coming days.
Bitcoin Outperforms Traditional Assets
Prem Reginald, a CoinGecko blockchain researcher, stated that Bitcoin is still the top-performing asset of the last decade, outpacing traditional assets by over 26,000%.
Year-to-Date Returns
According to Reginald, in 2024, Bitcoin was the best-performing asset with 129% returns. Gold followed with a steady 32.2% year-to-date (YTD) returns while the S&P 500 had 28.3% returns.
Conclusion
The Crypto Fear & Greed Index has dropped back to October levels amid a Bitcoin slump in the last days of 2024. As the market continues to experience volatility, it is essential for investors to stay informed and adjust their strategies accordingly.