The Crypto Fear & Greed Index Hits Lowest Level Since January 2023
The Crypto Fear & Greed Index, a gauge measuring relative market sentiment, has plummeted to its lowest level since January 2023, dropping to 27 on July 9, according to data from Glassnode.
For context, in January 2023, the collapse of the cryptocurrency exchange FTX was still fresh, having occurred just two months prior. At the beginning of that month, the Crypto Fear & Greed Index stood at 26, while Bitcoin (BTC) was priced around $16,500. However, by the end of January, Bitcoin experienced a price rally, rising to $22,000, as shown by data from TradingView.
Selling Pressure from Germany and Mt. Gox Fuels Fears
The current market panic is exacerbated by the German government selling off its BTC holdings and Mt. Gox compensating its creditors, which has led to Bitcoin's price dropping from approximately $63,000 at the end of June to a low of about $53,570 on July 5.
The German government has been offloading tens of thousands of Bitcoin in multiple tranches. Recently, it moved another $276 million worth of Bitcoin into its selling wallet. Data from Arkham Intelligence indicates that the German government still holds about 22,800 BTC.
Repayments from Mt. Gox have also begun, with the now-defunct exchange returning approximately $9 billion to creditors. Of the outstanding amount, $8.2 billion is in Bitcoin, which creditors are likely to sell, increasing selling pressure and heightening fears of another Bitcoin crash.
The Other Side of the Story
Despite the increased selling pressure from institutions, the Bitcoin Exchange Reserve, which is the amount of Bitcoin held on exchanges, has been steadily declining since 2021 and is currently at a multi-year low. This acts as a counterbalance to the selling pressure.
The Miner Supply Ratio and the Miners Position Index also indicate that miner reserves are depleted, suggesting that selling pressure from miners should be minimal at this time.
Fund investors responded to Bitcoin's recent price drop by making purchases, leading to the strongest weekly performance in Bitcoin funds in over a month.
