Bitcoin and other cryptocurrencies in the market are being abysmal price action lately. This comes despite the fact that the Fear & Greed Index shows that investors are still very greedy when it comes to digital assets. So why are prices still falling?
Investors Await CPI Data Release
The latest iteration of the United States Consumer Price Index (CPI) is scheduled to be released later this week and crypto investors seem to be waiting for this before taking any action. The release will happen on May 10, 2023, and will show if inflation in the country increased, decreased, or stayed the same, which can have a great impact on financial markets.
If inflation were to come in higher, the Fed could retake a hawkish stance which would be brutal for risk assets such as Bitcoin. However, if inflation numbers were to come in much lower, then a dovish stance is expected from the Fed, thus leaving a lot of room for investors to take more risks.
Lastly, if inflation were to stay the same, then it is safe to assume that there would not be much impact on the financial market and the crypto market by extension. Although what it could do is sustain present market sentiment and if the bulls continue to prevail, then momentum for an uptrend would likely build compared to a downtrend.
Bitcoin Fear & Greed Index Remains Strong
The Bitcoin Fear & Greed Index still points to the strong bullish sentiment among investors in the market as it continues to trend in ‘greed.’ This shows that crypto investors are still looking toward more upside, but the drawdown in the market depicts some level of wariness despite this bullishness.
Interestingly, the market also finished last week strong around this level, but today’s score of 60 on the index does point to a decline in greediness. Nevertheless, it remains at a reasonably high level compared to 2022’s figures.
Fear & Greed Index remains in greed | Source: alternative.me
A reversal in market trend from here could send the Fear & Greed Index back in the direction of ‘extreme greed’ once more. But while this level of greed is welcome in the market due to surging prices, it has been known to mark the top of market rallies, leaving a bittersweet aftertaste in the mouths of investors each time.
The price of Bitcoin is currently trading below $28,000 after crossing $31,000 last month. It is seeing 2.97% losses on the daily chart which brings its market cap back down to $541 billion.
