Crypto Fear and Greed Index reaches lowest level since January 2023

The Crypto Fear and Greed Index, an indicator that tracks relative market sentiment, has reached its lowest levels since January 2023, dropping to 27 on July 9, according to data from Glassnode.

For reference, January 2023 was just two months after the collapse of the crypto exchange FTX. At the beginning of that month, the Crypto Fear & Greed Index was at 26, while Bitcoin was trading around $16,500. However, by the end of the month, Bitcoin experienced a price increase and was trading around $22,000, according to TradingView data.

Germany’s sales and Mt. Gox heighten fears

Current market panic is fueled by the German government, which is selling its seized Bitcoins daily, and Mt. Gox, which is repaying funds to creditors, causing the price of Bitcoin to drop from around $63,000 at the end of June to a low of about $53,570 on July 5.

The German government is transferring tens of thousands of Bitcoins in multiple tranches to centralized crypto exchanges. The latest update reveals that it has transferred an additional $276 million in Bitcoin to its second wallet. Arkham Intelligence data shows that the German government still holds about 22,800 Bitcoins.

Mt. Gox repayments have also begun, as the now-defunct exchange starts to pay out approximately $9 billion to creditors. $8.2 billion of the unpaid amount is in Bitcoin, which creditors are likely to sell, adding further pressure to the sell-off and fears that Bitcoin will crash again.

The other side of the story

Despite increased selling pressure from the aforementioned institutions, the Bitcoin Exchange Reserve, or the amount of Bitcoin held on exchanges, has been steadily declining since 2021 and is currently at a multi-year low, acting as a counterbalance to the selling pressure.

The miner supply ratio and miner position index also show that miner reserves are depleted and that the selling pressure from miners should be minimized at this time.

ETF investors reacted to the recent drop in Bitcoin prices by buying the dip, representing the strongest weekly purchase for Bitcoin ETFs in over a month.