Virtual Currency Market Loses Momentum... Investor Sentiment Shrinks

Alternative Fear and Greed Index 21 Points (Extreme Fear)

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As the cryptocurrency market enters a downturn, investor sentiment is weakening increasingly.

According to cryptocurrency data provider Alternative on the 4th, the Fear & Greed Index, which indicates investor sentiment, dropped 6 points from the previous day to 21 points (extreme fear). Alternative's Fear & Greed Index ranges from 0 points, indicating extreme fear and pessimism about investment, to 100 points, indicating optimism.

The index has been declining as the overall cryptocurrency market capitalization has decreased by about 25% compared to the beginning of this year, signaling a downturn. Compared to early last month, it has fallen by 29 points. This month, after recording 22 points on the 1st, it reached its lowest level on this day.

Furthermore, compared to November 9th of last month, when the cryptocurrency market experienced an unprecedented boom and recorded its highest value, the index has dropped by 58 points. At that time, the leading cryptocurrency Bitcoin's price surged to $66,971 (approximately 84.48 million KRW). As of 9 a.m. on this day, the price aggregated by the global cryptocurrency market tracking site CoinMarketCap fell to $37,748 (approximately 47.62 million KRW), a 43.64% decrease. Recently, Bitcoin prices have been declining due to Russia's invasion of Ukraine and concerns over interest rate hikes in the United States. Additionally, with the May Federal Open Market Committee (FOMC) meeting expected to decide on a 0.5 percentage point interest rate increase, investor sentiment is contracting.

Looking at the Digital Asset Fear & Greed Index operated by Dunamu, which runs the domestic cryptocurrency exchange Upbit, investor sentiment shows a similar trend. On this day, the index was 46.39 (neutral), slightly up by 0.57 from 45.88 (neutral) the previous day, but down 13.88 from 60.33 (greed) on April 4th, one month ago. It is also 23.9 points lower than 70.35 (greed) a year ago. Dunamu's Digital Asset Fear & Greed Index is classified into five levels: 'Extreme Fear (0?20)', 'Fear (20?40)', 'Neutral (40?60)', 'Greed (60?80)', and 'Extreme Greed (80?100)'. Moving toward extreme fear indicates decreasing investor sentiment, while the opposite indicates increasing investor sentiment.