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Extreme Fear Back In Focus: Is It Time To Buy Bitcoin?

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Extreme Fear Back In Focus: Is It Time To Buy Bitcoin?

Data shows the Bitcoin market has again fallen back into a state of extreme fear as the price has plummeted down over the past week.

Bitcoin Fear And Greed Index Says Market Is Extremely Fearful

As per the latest weekly report from Arcane Research, extreme fear has returned to the BTC market, suggesting now may be the time to buy.

The “fear and greed index” is an indicator that tells us about the general sentiment among investors in the Bitcoin market.

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The index uses a numeric scale that runs from one to hundred for representing the sentiment. All values above the “50” point signify greed, while those below the cutoff imply the market is fearful right now.

Values towards the end of the range of above 75 and below 25 indicate sentiments of extreme greed and extreme fear, respectively.

Historically, bottoms have tended to form during periods of extreme fear while tops have occurred when the market is extremely greedy.

Because of this, some investors believe that buying during extreme fear and selling during extreme greed in optimal.

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Related Reading | Bitcoin Long-Term Holders Start Capitulating Amid Panic

“Contrarian investing” is a trading method that follows this idea. Warren Buffet’s famous quote best sums the philosophy up:

Be fearful when others are greedy, and greedy when others are fearful.

Now, here is a chart that shows the trend in the Bitcoin fear and greed index over the past year:

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The value of the indicator seems to have plunged down in the last week | Source: Arcane Research's The Weekly Update - Week 18, 2022

As you can see in the above graph, the Bitcoin fear and greed index now has a value of 10, suggesting that the sentiment has declined to extreme greed.

The report notes that the value of the metric hasn’t been worse than this since the COVID crash back in March 2020.

As mentioned before, such a sentiment usually brings with it buying opportunities. However, even so it’s not a sure buy signal either.

Related Reading | Will Mercury In Retrograde Bring A Mood Shift In Bitcoin?

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The last time the index reached a similar value was back in January of this year. Then, the bottom didn’t actually form until two weeks after the sentiment turned extremely fearful and Bitcoin observed another drop of 20%.

So, it’s not certain if now is the time to buy. But nonetheless, such a deep extreme fear sentiment might just be a signal for investors to look out for bottoms forming in the near future.

BTC Price

At the time of writing, Bitcoin’s price floats around $29.5k, down 25% in the past week.

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Looks like the price of the crypto has observed a sharp drop today | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

adoption

Central African Republic wants to launch Africa’s first legal Bitcoin investment platform

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Central African Republic wants to launch Africa’s first legal Bitcoin investment platform

Africa› Bitcoin › Adoption

President Faustin-Archange Touadera has said that the traditional formal economy does give his country a chance to be competitive.

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2 min read

Updated: May 25, 2022 at 4:50 am

Cover art/illustration via CryptoSlate

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According to an announcement on the country’s official Facebook page, the Central African Republic (CAR) is set to launch a cryptocurrency investment hub

The post revealed that the project would be known as “Sango.” According to the statement, President Faustin-Archange Touadera said

“The formal economy is no longer an option. An impenetrable bureaucracy is keeping us stuck in systems that do not give a chance to be competitive.”

President Touadera had hinted about the project on May 21 when he tweeted that “very soon we will announce the next planned phase” with the hashtag #Bitcoin.

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As a nation, we aim for a bright #future with #peace & #stability for our next generations. Today marks a month since we’ve started on this path. Other important #news will follow. Very soon we will announce the next planned phase.#Bitcoin #crypto #CAR #RCA

— Faustin-Archange Touadéra (@FA_Touadera) May 21, 2022

The Facebook post included a link to the landing page for sango.org, where visitors can register for the waitlist. Those who register for the waitlist will get a link to a 24-page presentation.

Central African Republic has huge Bitcoin plans

The document includes additional information about the project’s objectives, including building the first legal CryptoHub in Africa, taking Bitcoin Legacy to the next level, and Sango – The Crypto Island.

Following the unanimously adoption by the National Assembly of the #BTC legal tender status, we are pleased to showcase the first concrete initiative! It goes beyond politics&administration & has the potential to reshape #CAR’s financial system! #bitcoinhttps://t.co/1oxLHOen6q

— Faustin-Archange Touadéra (@FA_Touadera) May 24, 2022

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Additionally, it plans to establish a Digital Nation Bank, develop a crypto wallet, and facilitate land purchases using Bitcoin. Crypto firms will also have access to the natural resources in the country, and there will be a “citizenship by investment” program with zero taxes to encourage foreign investors.

The new plan comes a month after the Central African Republic announced making Bitcoin a legal tender. This made it the second country after El Salvador to take that step. 

International community does not support CAR’s Bitcoin decision

Several stakeholders have expressed concerns about the country Bitcoin’s decision. Analysts believe that there are significant barriers to Bitcoin adoption in the country.

The Central African Republic is one of the least developed countries in the world. It is ranked 188 out of 189 on the United Nations Human Development Index. Only 11% and 14% of its residents have access to the internet and electricity.

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Some residents have also expressed their surprise at the government’s adoption, as most are unfamiliar with crypto.

Although the government said that the National Assembly passed the bill making Bitcoin a legal tender unanimously, there are claims that many opposition lawmakers abstained from the votes.

The International Monetary Fund has also called for caution. IMF Africa Department Director Abebe Aemro Selassie said, 

“It’s really important to not see such things as a panacea for economic challenges our countries face.”

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TA: Bitcoin Price Moves Higher In Range, $30.6K Still Presents Resistance

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TA: Bitcoin Price Moves Higher In Range, $30.6K Still Presents Resistance

Bitcoin remained strong above the $28,500 support against the US Dollar. BTC is rising, but it must clear $28,500 to move into a positive zone.

  • Bitcoin started a fresh increase after it tested the $28,500 support zone.
  • The price is now trading above the $29,500 level and the 100 hourly simple moving average.
  • There was break above a major bearish trend line with resistance near $29,800 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair could continue to move higher towards the key $30,600 resistance zone.

Bitcoin Price Forms Triple Bottom

Bitcoin price extended decline below the $29,500 support zone. However, the bulls were active near the main $28,500 support zone.

A fresh base was formed near $28,600 and the price started a fresh increase. There was a clear move above the $29,200 and $29,500 resistance levels. The price surpassed the 50% Fib retracement level of the downward move from the $30,630 swing high to $28,635 low.

Besides, there was break above a major bearish trend line with resistance near $29,800 on the hourly chart of the BTC/USD pair. Bitcoin price is now trading above the $29,500 level and the 100 hourly simple moving average.

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Source: BTCUSD on TradingView.com

An immediate resistance on the upside is near the $30,160 level. It is near the 76.4% Fib retracement level of the downward move from the $30,630 swing high to $28,635 low. The next major resistance is near the $30,600 level. A clear move above the $30,600 resistance level might start a steady increase. In the stated case, the price may perhaps clear the $31,200 resistance zone.

Fresh Decline in BTC?

If bitcoin fails to clear the $30,600 resistance zone, it could start another decline. An immediate support on the downside is near the $29,600 level.

The first major support is near the $29,500 level and the 100 hourly simple moving average. A downside break below the $29,500 support might send the price further lower. The main support is still near the $28,500 level, where the bulls are likely to take a strong stand.

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Technical indicators:

Hourly MACD – The MACD is now gaining pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well above the 50 level.

Major Support Levels – $29,500, followed by $28,500.

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Major Resistance Levels – $30,150, $30,500 and $30,600.

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Bitcoin Rejects Downside At $29k, Here’s Why This Is Good

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Bitcoin Rejects Downside At $29k, Here’s Why This Is Good

Today’s Bitcoin price analysis is positive, as a dip to $29,000 was met with solid support and rejection, indicating that additional downside is unlikely. As a result, BTC/USD is expected to rise further in the next days, most likely above the $31,000 resistance level.

Naturally, the psychological price of $30,000 for Bitcoin implies a solid purchase zone. We’ll look at why Bitcoin’s recent consolidation around $30,000 is a promising sign of future price increases.

Bitcoin Fall 57% From ATH

Bitcoin prices have fallen from a high of $69,600 to a current level of $29,350. The entire cryptocurrency market was destroyed by this 57 percent price decrease. As a result of the decreasing prices, a snowball effect began to occur, causing other crypto projects to be hit and sink even more.

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The price range of $30,000 for Bitcoin is critical. Many large corporations bought Bitcoins at that price. Furthermore, as shown in Figure 2, Bitcoin prices historically consolidated around those precise positions before beginning an advance.

BTC/USD 1-day chart showing the consolidation area. Source: TradingView

For more than a week, bitcoin has been trading sideways, with the $31,000 mark acting as solid resistance. Meanwhile, significant support has been established at $29,000, signaling a clear consolidation region that must be overcome before the market can continue to develop.

The previous high was set at the same level as the previous low, signaling market hesitation. As a result, the recent $29,000 test could lead to another retest of the resistance.

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Related Reading | Eight Consecutive Red Closes: Is Bitcoin Headed For A Recovery?

Will Consolidation occur?

If BTC prices happen to drop below $28,000 again, the next support area would be around $20,000. However, it is more likely that prices will increase from this Bitcoin price consolidation phase. The first target is around $35,000, or a 17% increase in prices. After that, prices should target the next psychological price of $40,000. From there, we might see a slight adjustment lower, but in the long term, prices should break higher. This would mark the official start of the uptrend.

In order for bitcoin’s price to establish a foothold at the bottom in the short term, according to Josh Olszewicz, head of research at investment management Valkyrie, volatility must reduce.

“We can look at things like the 200-week moving average, which is around $22,000. We can look at realized price, which is the average price of coins that have moved on-chain, which is around $23,800,” Olszewicz said on CoinDesk TV’s “First Mover” program. “This [movement to hit bottom] will probably take at least all of Q3, perhaps Q4 as well, if it were to happen this year.”

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Other variables, like as the US Federal Reserve boosting interest rates, are also influencing bitcoin’s market performance, according to Olszewicz.

He speculated that institutional investors may be in the forefront of the downturn. The average size of on-chain transactions, according to Olszewicz, is in the tens of thousands of BTC.

Nonetheless, according to Olszewicz, ordinary traders continue to influence market movement more than institutional investors. Those learning about cryptocurrencies are now jumping in during this bear market to “test the waters” and “see if they can survive,” according to him.

Suggested Reading | Ripple (XRP) Plunges To $0.43 With Bears In Full Swing

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Featured image from iStock photo, chart from TradingView.com

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