[Bitcoin Now] Cryptocurrency Investors Shaken by Fear... Market Sentiment Still 'Contracted'

Investor Sentiment Index at 'Fear' Level Due to Economic Recession and Luna Incident

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The cryptocurrency market has taken a direct hit due to concerns over an economic recession, and investor sentiment is struggling to recover.

On the 29th, the Digital Asset Fear & Greed Index operated by Dunamu, which runs the domestic cryptocurrency exchange Upbit, stood at 25.96 (Fear). Compared to a week ago, it rose by 1.35 and 5.16 respectively, but it dropped by more than 10 points compared to April 8, before the Luna Classic incident began in earnest.

Dunamu's Digital Asset Fear & Greed Index is created by processing Upbit's cryptocurrency prices and trading volumes and is classified into five levels: 'Extreme Fear (0?20)', 'Fear (20?40)', 'Neutral (40?60)', 'Greed (60?80)', and 'Extreme Greed (80?100)'. The closer the index moves toward Extreme Fear, the more investor sentiment declines, while the opposite indicates a recovery.

Until last month, before the Luna Classic incident, Dunamu's Digital Asset Fear & Greed Index was at a neutral level. However, investor sentiment froze as the Luna Classic incident overlapped with global recession concerns.

Since the beginning of this month, except for the 6th when the index was 40.22 (Neutral), the index has shown Fear or Extreme Fear levels. In particular, on the 13th, it dropped to 5.96 (Extreme Fear), the lowest this year. At that time, the coin market was highly volatile, with the price of the leading cryptocurrency Bitcoin plunging from the $28,000 range to the $23,000 range.

Looking at the Fear & Greed Index calculated by cryptocurrency data provider Alternative, it also confirms that investor sentiment is shrinking. Since the Luna Classic incident, it has continuously maintained an extreme fear state, showing 13 points (Extreme Fear) on this day as well. Although it rose by 3 points from the previous day, it fell by 4 points compared to the 17 points (Extreme Fear) at the beginning of the month. Alternative's Fear & Greed Index ranges from 0 to 100, where 0 indicates extreme fear and pessimism about investment, and closer to 100 indicates optimism. It is compiled using cryptocurrency liquidity, trading volume, and mention volume.

Meanwhile, according to the global cryptocurrency market relay site CoinMarketCap, as of 11:07 a.m. on the same day, Bitcoin was trading at $20,349 (approximately 26.28 million KRW), down 1.30% from the previous day. The Nasdaq index in the U.S., which showed synchronization on the 28th (local time), closed down 343.01 points (2.98%) at 11,181.54, which had an impact. Negative factors are piling up as cryptocurrency investment hedge fund Three Arrows Capital (3AC) failed to repay loans worth $670 million (approximately 865 billion KRW). Additionally, reports emerged that Roger Ver, founder of Bitcoin.com, was sued for failing to repay $47 million in debt to CoinFlex, and forecasts that Bitcoin's price could fall to $10,000 have surfaced, making any improvement in investor sentiment a distant prospect.