Thread by @Washigorira

Market sentiment and #Bitcoin Fear & Greed Index considerations. A lot of misconceptions.

We all know Warren Buffett’s famous quote :
"Be fearful when others are greedy, and greedy when others are fearful."

Let's take a dive into this.
#Bitcoin 🧵
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2/11
What is F&G exactly?
It’s a multifactorial crypto market sentiment analysis.
It shows how people are feeling towards #Bitcoin at any given time.

As market usually moves against the majority’s sentiment, market’s sentiment can be considered as a contrarian indicator.
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3/11
While market lows usually occur with extreme fear and market tops with extreme greed, it should be pretty easy to time the market so far right? 😃
Let’s not jump to conclusions as F&G is often misused.

#Bitcoin been sitting in extreme fear territory for some time now.
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4/11
Isn’t that a good sign for #Bitcoin then? Or more precisely, is extreme fear systematically a contrary indication?

Well, it depends on where we at in the cycle.

In a bull market, when sentiment drops significantly it’s a very bullish sign for #Bitcoin.
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5/11
It usually indicates a local bottom followed by an uptrend. Under these conditions, F&G’s quite relevant to use among other things to build conviction.

Yet at the beginning or in a middle of a bear market, market sentiment isn't that reliable as a contrary indication.
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6/11
Symmetrically in a bear market when sentiment increase significantly, it’s a bearish sign for #Bitcoin.

It usually indicates a local top followed by a downtrend. Under these conditions, F&G’s quite relevant to use for shorting.
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7/11
As Price & Market can stay irrational longer that we imagine, market sentiment and F&G should be used with caution and properly according to where we at in a cycle.

Now the question is : are we in a middle of bear market or close to the end of it?
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8/11
I believe we might be very close to its end.

Based on past datas, we know that each time the F&G was below 10, out of four times, two where bottom signals.

Statistically 50% of the time… So It does not help much in the current situation. Unless there’s a tell. 🧐
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9/11
Lately, I came across a video from @CryptoCrew were he brought a very interesting idea.

According to his thesis, based on historical data points we have, for a bottom to be in, F&G needs to have a cluster of data points below 10 for several weeks.
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10/11
Otherwise it might be a short term relief rallye and not a bottom.

Since early may we started to see a cluster of data points below 10 or equal to 10 that look very similar to what we had in the past when #Bitcoin bottomed.
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11/11
Based on these elements, there's a good probability that #Bitcoin bottom's already in or very close to it.

If you went to the end of this 🧵 and find it helpful, consider RT. 🙏

#Bitcoin #BTC #Cryptos