Coin Investment Sentiment Shrinks Amid Luna Crisis and Recession Fears... 'Extreme Fear'

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Investment sentiment toward cryptocurrencies has struggled to recover due to the U.S. Federal Reserve's (Fed) interest rate hikes and concerns over an economic recession.

According to cryptocurrency data provider Alternative on the 26th, the Fear & Greed Index, which measures investment sentiment, remained at 14 points (extreme fear), the same as the previous day. Last week, it even dropped to 6 points (extreme fear). Alternative's Fear & Greed Index ranges from 0 to 100, where 0 indicates extreme fear and pessimism about investment, and values close to 100 indicate optimism.

Meanwhile, Dunamu, which operates the domestic cryptocurrency exchange Upbit, reported its Digital Asset Fear & Greed Index at 32.30 (fear) on the same day. Compared to 22.29 (fear) on the 19th of this month, a week earlier, it rose by 10.01 points but fell by 2.13 points compared to the previous day. 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 declining investment sentiment, while the opposite indicates a revival of investment sentiment.

Investment sentiment has been subdued since the Luna Classic incident. Before the Luna Classic incident, on the 7th of last month, Alternative's Fear & Greed Index recorded 23 points, but it dropped to 18 on the 8th and 11 on the 9th. The sister coin Luna Classic's price plummeted following a sharp decline in the price of TerraUSD (UST), a stablecoin designed to be pegged to 1 dollar, causing a massive crash. Even after the Luna Classic crash, the Fed's giant step (a 0.75% point interest rate hike) and inflation concerns have prevented recovery.

Meanwhile, Bitcoin prices are hovering in the $21,000 range. According to the global cryptocurrency market tracking site CoinMarketCap, as of 3:37 PM on the day, Bitcoin was priced at $21,378 (approximately 27.71 million KRW), up 1.03% from the previous day.