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Binance’s CZ: High Inflation And Recession Fears Will Drive Bitcoin Adoption

It’s safe to say CZ is bullish on bitcoin and crypto’s future. Changpeng Zhao visited CNBC’s Squawk on the Street and flipped the prevalent bearish narrative on its head. In less than 2 minutes. Most of the things CZ said are based on common sense and a basic understanding of market forces, but still, it’s calming to hear a leader of the industry saying them. Especially in this fear-ridden stage of the cycle we’re in.

.@binance CEO @cz_binance: The macroeconomics situation will be high inflation, the talk about recession…all of those things drive adoption into #Bitcoin.@CNBC pic.twitter.com/EP8OHwPeAa

— Squawk on the Street (@SquawkStreet) July 28, 2022

Notice that even though Binance’s business is dependent on altcoins’ performance, especially BNB, CZ makes a clear distinction between bitcoin and crypto in general. On the other hand, even though the interview is about bitcoin, CZ sneaks crypto here and there. 

In any case, let’s analyze what Binance’s CEO thinks about the current market conditions and the future of bitcoin and crypto.

What Did CZ Squawked On US National TV?

The first thing the interviewer was interested in was the way that bitcoin bulls have defended the “20Kish” line. According to CZ, that was “the last peak” so there’s a “psychological barrier” there. So far, bitcoin’s price had never go lower than the previous cycle’s all-time high. This time it was different, probably because of Tesla’s paper hands and the Terra collapse. However, the market ended up defending the 20K line.

The interviewer then asked about other factors, like the increase in money supply or bitcoin’s correlation to Nasdaq. According to CZ, those are two relevant factors, but in the end “it’s a mass psychology market” and the last ATH is the barrier. It’s only fair that we quote Binance Academy for an explanation of the psychology of market cycles:

“In short, market sentiment is the overall feeling that investors and traders have regarding the price action of an asset. When the market’s sentiment is positive, and prices are rising continuously, there is said to be a bullish trend (often referred to as a bull market). The opposite is called a bear market, when there is an ongoing decline in prices.”

Recently, as we regularly do here at NewsBTC, we checked on the famed fear and greed index for insights into the current market sentiment. This is what we found:

“Last week, the indicator’s value had risen up to even 34 as the coin’s price saw a recovery rally. However, as the run ended and the crypto once again slumped down, so did the sentiment among the investors.

The report notes that this trend indicates participants in the BTC (and wider crypto) market believe that this recent rally was just a fakeout.”

BNB price chart on BinanceUS | Source: BNB/USD on TradingView.com
What’s the next catalyst?

Back to the interview, the next question was about what factor could catapult bitcoin and crypto into their next chapter. Cautiously, CZ said that no one can forecast that accurately. “Nobody really forecasted NFTs, DeFi, etc. Which probably drove the last bullrun.” And in 2017, ICOs seemed to be the catalyst. “Six months before those things happened, very few people can forecast it.”

In bull markets, exercise risk management.

If everything went to 0, will your life still be ok? If no, you invested too much. Reduce it by half and ask again.

Don't over invest. (Not financial advice)

— CZ Binance (@cz_binance) July 29, 2022

Then and only then, CZ speculated. He thinks that the market is so much bigger this time around, with so many new applications being developed. The whole space is moving in a positive direction, with most countries adopting regulatory frameworks instead of banning bitcoin and cryptocurrencies. It’s hard not to be bullish in an environment like this, even if the market is still fearful about the prices.

The last phrase is the funniest, and it goes into the current state of the world. “The macroeconomic situation, there’s going to be high inflation, the talk about recession, etc. All of those things drive adoption into bitcoin… into crypto.”

Featured Image: CZ, screenshot from the video | Charts by TradingView

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Crypto Market Bloodbath Creates Largest Stretch Of Fear Since April Peak

As the downtrend in the crypto market continues, so does extreme fear. What’s inspiring the sell-off? Is it Omicron? Or is it Evergrande? Is it a conspiracy? Or is it the holidays? All those questions and more have had the Fear and Greed Index pointing left for a month straight. What does this mean? Where do we go from here? That’s what we’re here to explore. 

Related Reading | Blood In The Streets: Crypto Market Becomes Fearful As Bitcoin Dives

But first, let’s talk about the Fear and Greed Index. One of the many Bitcoin indicators, it measures the market’s general sentiment at the moment. Zero is extreme Fear. A hundred is extreme Greed. And the indicator oscillates between those two at any given time. It’s been said that the crypto market is very emotional. The Fear and Greed Index is there to keep investors from making irrational decisions based on sentiment alone. 

Fear And Greed Index shows Extreme Fear | Source: Arcane Research’s The Weekly Update
What’s The Fear And Greed Index Saying Now?

According to Arcane Research’s The Weekly Update, fear has settled in:

“The Fear and Greed Index has now signaled “Fear” or “Extreme Fear” for almost one month straight. The last time we saw such a prolonged fearful market sentiment was at the beginning of the summer when the market sentiment was fearful for more than two months straight. With the sustained consolidation of bitcoin, the late autumn euphoria has dampened, and the overall sentiment seems very negative at the moment.”

The report also says that, “during steady sell-offs, bitcoin tends to outperform the overall crypto market.” And this time was no exception, BTC “outperformed all indexes so far in December, seeing a negative return of -18% after a relatively flat second week of trading this month.” On the other hand, “the Small Cap index has seen a loss of nearly a third of its value in December.“ What does this mean in general?

“The bitcoin dominance has risen by 1.13% in the last week. This is the third time we’re seeing bitcoin dominance bottom at 40% in 2021. The last two times were May 19th and Sep 13th. It seems that the 40% threshold is a difficult area for alts to sustain”

BTC price chart for 12/15/2021 on Eightcap | Source: BTC/USD on TradingView.com
What Can We Expect In The Future?

To get our dose of technical and on-chain analysis, let’s give the mic to this month’s Fear & Greed Index Newsletter:

“A major factor here is the cycle support band. We cannot ignore the fact that Bitcoin had just closed 2 consecutive weeks below the market support band. Historically, this meant that we’d see a longer consolidation phase before we could have a true reversal in the trend. The takeaway here is this, as long as Bitcoin closes the week below the cycle support band, we shouldn’t expect any major breakout in price to take place.”

Every dog has its day, though. A week ago, analyzing a very similar market sentiment, NewsBTC informed you:

“A “Fear and Greed” Index on Extreme Fear levels, according to certain analysts, has historically preceded crypto market local bottoms. However, a run into new highs could see an obstacle as the macro-economic outlook turn complex.”

Related Reading | Bitcoin Price Bloodbath: Is El Salvador A “Sell The News” Event?

It’s also important to remember that only two months ago, we were in a similar situation and the sentiment did a complete 180 in a matter of weeks. 

“The indicator dipped all the way down to extreme fear on 30th September, but in under two weeks the sentiment has already rebounded back to extreme greed. The report notes that this shows how fast the sentiment can change among the crypto market.”

With that being said, and a disclaimer that this isn’t financial advice, in a situation like this there’s only one thing we could say… hodl the line! 

Featured Image: PublicDomainPictures on Pixabay| Charts by TradingView

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Bitcoin Sentiment Suggests Serious Greed, But Will A Correction Come?

As Bitcoin made a new all-time high above $68k, the crypto market sentiment changed to extreme greed. Periods of such sentiment have lead to corrections in the past, but will the trend be similar this time?

Bitcoin Fear And Greed Index Starts Pointing At Extreme Greed

As per the latest weekly report from Arcane Research, the fear and greed index is now pointing at extreme greed as BTC makes a new ATH.

The fear and greed index is a Bitcoin indicator that shows what the current crypto market sentiment is. The metric uses a numeric scale that ranges from zero to hundred to display the sentiment.

Values below fifty signal that the market is currently sharing fear, while values above it imply investors are becoming greedy.

If the indicator’s value goes above 75 or below 25, then it means the market is showing extreme greed or extreme fear, respectively.

Periods with extreme values suggest the market could witness a reversal soon. A correction may follow extreme greed values, and a change to uptrend may follow from an extremely fearful market.

Related Reading | How Bitcoin Has Performed Compared To Top Stocks

Here is where the current Bitcoin fear and greed index needle points at:

Looks like the crypto market is seriously greedy at the moment | Source: The Arcane Research Weekly Update – Week 44

As the above meter shows, the current market sentiment is that of extreme greed. This is an increase from last week as the values were in the normal greed territory then. This change is caused by BTC reaching a new ATH.

Related Reading | S2F Creator PlanB Believes In $98k Nov Target For Bitcoin

The market was also greedy last month. The below chart shows the trend in the value of the indicator over the past year.

Crypto market sentiment has been in the greed territory for a while now | Source: The Arcane Research Weekly Update Week 44

The market has now seen one month straight of extreme greed or greed sentiment. The last time this happened was from August to September, and the streak then ended with the El Salvador day crash.

This period of greed might suffer a similar fate. However, the report notes that during Spring the indicator’s value remained consistently high for a prolonged period. So it’s possible a similar trend could be seen in the coming weeks instead.

BTC Price

At the time of writing, Bitcoin’s price floats around $66.5k, up 4% in the last seven days. Over the past month, the crypto has gained 20% in value.

Here is a chart that shows the trend in the value of the coin over the last five days:

BTC’s price made a new ATH today, but has since come down a bit | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

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Greed Spikes To Seven-Month High Alongside Record Crypto Prices

Data shows greed in the crypto market has spiked to seven-month highs as coins record new all-time highs (ATHs).

Crypto Fear And Greed Index Points At Extreme Greed

As per the latest weekly report from Arcane Research, the fear and greed index has recorded seven-month highs as the needle points at extreme greed.

The “fear and greed index” is an indicator that represents the general sentiment of the crypto market on a numeric scale that goes from 0 to 100.

When the metric has values below 50, it means there is, on average, fear among investors. Values lower than 25 denote extreme fear. Such a sentiment is usually seen after big corrections, and periods of extreme fear may prove to be good buying opportunities.

While the needle pointing above 50 means the crypto market is starting to get greedy. Extreme greed occurs when values exceed 75. Very high values near 100 may mean there will be a correction soon so investors may not buy more at this point.

Here is a meter that shows what the current market sentiment is:

The fear and greed index seems to be pointing at extreme greed at the moment | Source: The Arcane Research Weekly Update – Week 42

As the above meter shows, the crypto market looks to be extremely greedy right now as the value of the indicator stands at 76.

Related Reading | Bitcoin Funding Rates Touch Same Level As Early September, More Correction To Come?

Comparison with last week’s and last month’s values is also given below the meter, which were 75 (extreme greed) and 27 (fear), respectively.

The below chart gives a better idea about how the current fear and greed index values compare with those of the past:

The values of the indicator over the last one year | Source: The Arcane Research Weekly Update – Week 42

On examining the above graph, it becomes apparent that the fear and greed index reached values of 84 this week, the highest in the last seven months.

Related Reading | Breaking Down The Bitcoin Binance Flash Crash By The Second

This peak was made just a day after Bitcoin made its new ATH of around $67k, but shortly following that the price had a correction. The below chart shows this trend in BTC’s price:

BTC’s price continues to go down after making a new ATH | Source: BTCUSD on TradingView

The fear and greed index also took a hit in response to this decline in Bitcoin’s price, but nonetheless, values still remain in the extreme greed category, which means the crypto market still expects prices to go higher.

During the rally earlier in the year, values consistently remained in the extreme greed category, and corrections only caused temporary declines in the indicator.

This means that if the market has to continue making newer ATHs, the market sentiment should remain greedy, otherwise the bull run might start losing steam

Featured image from iStock.com, charts from TradingView.com, Arcane Research

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Fear And Greed: Sentiment Turns Neutral As Bitcoin Stagnates, What To Do?

It’s the calm before the storm. What to do when the Fear and Greed index turns grey? Warren Buffett already told us to be greedy when others are fearful. We already know that we should be fearful when others are greedy. What should we do when the market it’s at a rare state of balance and expectations are high? We should probably take a page for those Bitcoin maximalists and… wait for it… HODL!

One of the main criticisms that the Fear and Greed Index gets is that it encourages traders and investors to try to time the market instead of holding strong. Bad things happen to those who try to time the market. Yet, we try to do it. The temptation is too strong. Bad things happen to those who trade emotionally. Yet, some fall for that trap over and over again. In fact, it could be argued that the Bitcoin and cryptocurrencies markets are even more emotional than the traditional ones. And that’s saying a lot. 

In any case, before making any rash decisions, we should remember what we’re talking about here.

The Fear & Greed Index goes into neutral territory | Source: Arcane Research
What Exactly Is The Fear And Greed Index?

We at NewsBTC deal with this constantly. Even though the Fear and Greed Index is a criticized and questionable indicator, there’s an undeniable connection to the market that’s obvious even to the casual observer. When we found a bizarre correlation between the Fear & Greed Index and UTXO data, we prefaced it with:

“As a speculative asset, nothing else quite behaves like Bitcoin. Shifts in sentiment take price action to the extreme. As a result, tools have been developed to monitor the fear or greed in the market.”

The website Alternative.me calculates the main Fear And Greed Index for cryptocurrency markets, they explain its reason to be as:

The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:

  • Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.

  • When Investors are getting too greedy, that means the market is due for a correction.

We, very simply, explained why when we described how the Fear And Greed Index can be used as a trigger indicator:

“Financial market sentiment can almost always be used as a contrarian indicator. But in a speculation driven industry where hype and buzz matter more than fundamentals, this is even more true.”

BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
What Does It Mean When The Sentiment Turns Neutral

After what seemed like years of coldness and extreme fear, the market sentiment started improving as early as a week ago. And, even though it doesn’t feel that way, this advance into neutral territory is a huge improvement. As Arcane Research said in their “The Weekly Update” report:

“The Fear & Greed Index has climbed rapidly since late July and touched neutral levels for the first time since May. Despite the slight decline in the last couple of days, the market is certainly getting more bullish. This bullishness is also evident in the futures market.”

So, what should you do now that the sentiment turned neutral? Not much. Keep your finger on the trigger, though. Things are about to get interesting.

Featured Image by Kristopher Roller on Unsplash – Charts by TradingView