The age-old trader’s adage of selling when people are greedy and buying when people are fearful has proven to be empirically accurate, and the same credo applies to Bitcoin (BTC) and the general crypto markets, as upwards price surges typically come about when market participants grow increasingly weary of the market conditions.
Now, Bitcoin’s fear index is signaling that traders are more afraid of an imminent pullback at BTC’s current price levels than during the asset’s previous pullback that sent it down to $3,900 after it sharply rose to $4,200 in late-February.
Bitcoin Stable Above $5,000 as BTC Forms Fresh Support Levels
At the time of writing Bitcoin is trading up nearly 1% at its current price of $5,090, just a hair below its daily highs of roughly $5,100.
Earlier this week, the upwards momentum that Bitcoin and the entire crypto markets had incurred was put into jeopardy after BTC quickly surged to highs of just over $5,400, where it incurred a significant amount of selling pressure that sent it reeling down to lows of nearly $4,900.
This drop instantly shifted the sentiment of the market participants from being highly bullish to overwhelmingly bearish, but some notable traders had predicted the drop and acted accordingly.
Red, a popular cryptocurrency trader on Twitter, spoke about how he traded the recent price action, noting that he shorted the top and subsequently added to his BTC position after it reached the $4,900 region.
“Comments as if I hadn’t planned for this since you were euphoric when I shorted the top. Excellent reaction exactly where I wanted it. Price visited my level, and I bought. Simple enough. Now comes flexibility; I will flip bear if need be,” he explained.
Comments as if I hadn't planned for this since you were euphoric when I shorted the top. Excellent reaction exactly where I wanted it. Price visited my level, and I bought. Simple enough.
— red (@redxbt) April 12, 2019
BTC Fear Index Signals Further Price Surge Could be Imminent
Bitcoin’s fear index, which is an indicator of the general sentiment surrounding Bitcoin, currently signals that traders are fearful that it will drop lower, which likely means that further gains are imminent.
Mr. Anderson, a popular cryptocurrency analyst on Twitter, spoke about this index and what it could mean, noting that traders are currently more fearful about a pullback than they were while BTC was resting in the low-$4,000 region, which means that the cryptocurrency will likely climb higher before dropping lower.
“$BTC FEAR (BEAR CONTAGION DISEASE) There is more FEAR currently at the pullback to $4900 than there was at the previous pullback to $3900. Disbelief is a Bull’s friend. The sentiment is saying she’ll go higher before she goes lower,” he said in a recent tweet.
$BTC FEAR (BEAR CONTAGION DISEASE)
There is more FEAR currently at the pullback to $4900 than there was at the previous pullback to $3900
Disbelief is a Bull's friend. The sentiment is saying she'll go higher before she goes lower pic.twitter.com/JglQoXIpCX
— Mr. Anderson (@TrueCrypto28) April 12, 2019
Because the markets have found stability at their current price levels, and because traders are expressing increasing fearfulness regarding a pullback, it is likely that BTC will surge higher in the coming days.
Featured image from Shutterstock.
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* First published on newsbtc.com