The Crypto Fear & Greed Index, a widely followed indicator of overall market sentiment, has remained in the “Extreme Fear” zone at a reading of 10.
The parameter has fallen sharply from the 20 recorded last month, indicating that the current market sentiment is turbulent and dampened.
The index measures investor emotions using factors such as volatility, trading volume, market momentum, and social sentiment. This indicates a reduction in uncertainty and risk aversion among traders.
The continued decline indicates that investors are increasingly becoming cautious as prices fall, macroeconomic pressure builds, and risk appetite weakens across digital asset markets.
Extreme Fear levels indicate a situation of panic selling or reluctance to buy new assets. However, some analysts consider this a buying opportunity because, historically, extreme levels of fear precede a stable market.
Global uncertainty weights on crypto markets
The current geopolitical turmoil, especially that of the middle-east has hurt investor appetite, creating a downfall in most risk related markets.
Global oil markets reacted sharply to rising geopolitical tensions as crude oil and Brent prices jumped more than 7 percent on Monday, reflecting growing supply concerns.
The rising conflict levels between the U.S. and Iran, along with the attacks on the ships passing through the critical Strait of Hormuz, have raised the risk of disruptions in one of the world’s busiest energy routes.
The energy markets are often seen reacting quickly to geopolitical risk, and the latest developments have prompted investors to seek safe-haven assets while creating volatility in the equity and currency markets.
The risk associated with the ships has also heightened as Maersk has suspended operations through the region, raising the real risk of operations being disrupted.
The analysts have stated that the conflict levels could sustain high oil prices, which might lead to higher inflation risks across the globe.
On the other hand, gold and silver prices have risen by 2 percent and 2.8 percent, respectively, which is a classic flight to safety, indicating that investors have started investing in traditional safe-haven assets with the rise in geopolitical risks.
Asian markets have shown a cautious trend during trading hours today, with Japan’s Nikkei 225 index falling by 1.35 percent, while Hong Kong’s Hang Seng Index has fallen by 2.10 percent, whereas China’s CSI 300 index has managed a positive close with a gain of 0.35 percent.
The U.S. markets have yet to open, and markets in Dubai and Abu Dhabi have suspended trading for the past two days because of the ongoing conflict.
How did crypto react?
The latest price movement of Bitcoin is an indication of the level of response the crypto markets are giving to the overall macro and geopolitical issues.
The price of the OG-crypto has fallen to $66,266.26, which is way below its ATH.
If the conflict is held under control and the price of oil remains stable, the markets are likely to calm down, and the shorts would have to cover their positions. This would help the price of Bitcoin recover.
On the other hand, if the situation worsens, the global oil supply would be affected, which would increase the price of oil. This would lead investors to move away from the riskier side, which would cause the price of Bitcoin to move towards the lower liquidity zone.
f the conflict is resolved quickly, the markets would react positively, and the shorts would have to cover their positions, which would lead to a squeeze.