How to Trade Crypto During Periods of Extreme Fear and Greed

• The Fear and Greed Index reads 27 as Fear engulfs the market. 
• The German government and Mt. Gox repayments have turned investors bearish.
• Santiment data said that traders have turned more bearish than in a year.

The crypto market has been riding a rollercoaster of emotions, swinging between neutral, fear, and greed over the past few weeks as volatility tightens its grip. Major cryptocurrencies have seen double-digit drops, suggesting that investors are cashing in on earlier gains.

According to the “Fear and Greed Index” by alternative.me , the last time market sentiment reached “Greed” was on June 24, fueled by the approval of spot Bitcoin ETFs by the SEC in January. However, Bitcoin’s subsequent drop to $58,000 from $63,000 quickly turned the mood bearish.

Despite briefly reclaiming the $60,000 mark, the index plunged to 30, signaling “Fear.” July opened to a neutral sentiment but quickly worsened as BTC dipped below $50,000.

The primary culprits behind this “Fear” are the German government’s selling pressure and the Mt. Gox creditor repayments. The German government’s recent move of 16,039 BTC (worth around $1 billion) triggered a price dip. However, they quickly reacquired 3,673 BTC, adding to the market’s volatility.

With Bitcoin struggling to stay above $58,000, online forums like X (formerly Twitter), Reddit, Telegram, 4Chan, and BitcoinTalk have been overflowing with bearish sentiment. The back-and-forth move was highlighted by Spot On Chain, which spurred market volatility. 

Santiment data reveals that such widespread fear, uncertainty, and doubt (FUD)) often signal a potential rebound, catching the majority off guard. Meanwhile, spot Bitcoin ETFs saw inflows of $294.8 million on Monday, according to Farside Investors data .

This “Fear and Greed” dance highlights the market’s volatility. With multiple factors at play, short-term price movements could surprise even seasoned investors. As of now, the Fear and Greed Index reads 27, indicating a persistent “Fear” in the market.