Sentiment is Fragile
After last week’s sudden nuke, sentiment in crypto markets plunged from a state of greed right into fear over a single day. Given the last 10 days of price action, it’s safe to say this was an overreaction. But this highlights how fragile sentiment currently is in the market, making it a ripe environment to chop traders up and catch leveraged positions offside.
Fluctuations in the Fear & Greed index are to be expected. As we saw during the Nov. – Jan. stretch last year as well and May. – Jul. this year, the market can remain at an extreme level of sentiment (either fear or greed) for an extended period of time.