Key Takeaways
- The Bitcoin Fear & Greed Index has reached its lowest point since January 2023.
- German government sales and Mt. Gox repayments are fueling current market fears.
- Bitcoin Exchange Reserve is at a multi-year low, acting as a counterbalance to selling pressure.
The Bitcoin Fear & Greed Index, which tracks market sentiment, dropped to 27 on July 9, the lowest level since January 2023, according to Glassnode. This drop indicates significant negative investor sentiment.
In January 2023, two months after the FTX collapse, the index stood at 26, with Bitcoin trading around $16,500. By the end of January, Bitcoin’s price had rallied to around $22,000, as per TradingView data.
The current market fears are largely driven by the German government’s sale of its Bitcoin holdings and repayments by the defunct exchange Mt. Gox. The German government has been offloading tens of thousands of Bitcoin, recently shifting $276 million worth to its selling wallet. Arkham Intelligence reports that it still holds about 22,800 BTC.
Simultaneously, Mt. Gox has begun repaying creditors approximately $9 billion, including $8.2 billion in Bitcoin, which is expected to add to the selling pressure and contribute to fears of another price crash.
Despite these selling pressures, the Bitcoin Exchange Reserve, indicating the amount of Bitcoin held on exchanges, has been declining since 2021 and is now at a multi-year low. Additionally, indicators such as the Miner Supply Ratio and the Miners Position Index suggest that miner reserves are exhausted, potentially minimizing further selling pressure from miners.
In response to the recent price decline, fund investors have been buying the dip, marking the strongest weekly performance for Bitcoin funds in over a month.
