Despite steadily recovering from anxiety, the market has again returned to acute fear in the absence of a significant price decline. As a result, despite recovering to roughly $50,000, the price of Bitcoin fell below $47,500, and the market is currently in a state of great panic.
Bitcoin Fear and Greed Index
Despite its tremendous increase in November, the price of Bitcoin took a dramatic turn in November, with the market changing from extreme greed to severe anxiety. At the time of the article, the Bitcoin fear and greed index ranked the market at only 22 at a price of roughly $47K.
Despite the market sentiment toward BTC steadily recovering from its dip to $46K, the cryptocurrency has yet to enter a bullish run. In addition, Bitcoin encountered strong resistance at $50,000, yet after repeatedly brushing up against it, BTC plummeted.
When Will Bitcoin Regain Its Bullishness?
At the present, Bitcoin is still trading very close to its support, causing the market to panic. Although not as severe as a previous decline when the price of BTC dropped from a stunning $69K to $46K, the significant resistance and Bitcoin’s failure to overcome it imply that the market may be locked either sideways or downwards for quite some time.
BTC still has to break through its resistance at about $50K before it can become bullish again. If Bitcoin breaks through the $50K resistance level, the price may begin to rise again. According to CoinDesk, the resistance for a bullish trend is between $50,000 and $55,000.
Profiting During Extreme Greed
When it comes to market psychology, extreme anxiety is typically a state in which new and unskilled investors panic and begin selling their assets. However, as highlighted by Investopedia, this could be an opportunity for astute investors to purchase the asset at a discount.
Extreme greed, on the other hand, occurs when non-investors or other individuals who were not initially interested in investing buy in as the asset rises to new heights. Because of all the publicity Bitcoin received as it began setting new all-time highs, a slew of new investors jumped in.
When knowledgeable investors discover that the market is in a situation of great greed, this is when they begin to take profits, and as a result of the accumulation of their assets, this is usually when the price begins to fall.
Combined use of the RSI Indicator and the Bitcoin Fear and Greed Index
The effect on the price could be pretty large due to the amount of skilled investors taking profits and the volume they possess collectively. To add to that, this is technically what happened during the decline, as shown on CoinGecko.
The RSI, which indicates whether an item is oversold or overbought, is one indicator that works nicely with the Bitcoin fear and greed index. Swing traders can use the RSI to help them buy when the asset is oversold and sell when it is oversold.