Is the cryptocurrency market heading for an altcoin season after the Bitcoin crash is over? Yes, at least, that’s according to crypto influencers. Bitcoin has been dropping in value since May 4th and is currently worth approximately $30,000. As expected the fear and greed index also took a tumble and currently stands at 11, which is extreme fear. The price of Bitcoin is diminishing and altcoins are following the same pattern.
However, there are still numerous individuals out there who believe that the price the market will reverse and turn bullish. These individuals or as I call them – crypto influencers – can be found on twitter. While the crypto market seems to be imploding, these influencers are filled with hope and grand ideas that Bitcoin is getting ready to go to an all time high (ATH) and that altcoin season will “melt our faces off”. Are these crypto influencers unhinged or are they on to something?
Correlation between Fear and Greed Index and Performance of Cryptos
If we examine Bitcoin’s chart and a graph of the fear and greed index, we will find that the two are correlated. Obviously when Bitcoin and other cryptos decrease in value, the fear and greed index will be lower and vice versa. Currently, with the fear and greed index at 11, the sentiment regarding the crypto market is at rock bottom. But according to Warren Buffet, this is the perfect time to buy more assets as he previously stated “Be fearful when others are greedy and greedy when others are fearful”. The logic behind his statement is this: when the market sentiment is greedy that means the top of an asset’s value has arrived and that is when you should sell. Whereas, when market sentiment is fearful that means the bottom of an asset has arrived and it is time to buy in. It seems the crypto influencers are applying Warren Buffet’s logic to the crypto market and they believe that the price of Bitcoin and altcoins have bottomed out and the only way for them to go now is up.
Truthfully speaking, this exact scenario of Bitcoin bottoming when the market sentiment is in extreme fear and later pumping to a new ATH has happened before in the summer of 2021. During that time, the Fear and Greed Index was at one of its lowest values and Bitcoin was in retracement after reaching a high of ~63,000 dollars. Bitcoin retraced to approximately $30,000 on July 19 and around the same time, the Fear and Greed Index was recorded to be at 10. Guess what happened next? Months later, Bitcoin started climbing back up again and went to a new ATH of $68,000 on November 7. Could this same exact scenario be repeating right now? Who knows, but that is exactly what these crypto influencers are banking on. Because this HAS happened before, a lot of people in the crypto-community are encouraging others to “buy the dip” or “hodl” so much so that those two phrases started trending on Twitter.
However, this doesn’t mean that you should go out and spend your hard earned money buying altcoins and Bitcoin. Just because this scenario has played out before, that doesn’t mean it is guaranteed to happen again. If you truly believe that Bitcoin will hit a new ATH soon or that altcoins will go on this massive bull run then only invest an amount that you can afford to lose. You should never let others or crypto influencers decide when you should invest in an asset, that decision is yours alone. I, for one, have already made a decision to “hodl” my current cryptos during this crash and that was my choice alone.