Bitcoin Fear and Greed Index hits lowest level since January 2023

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The Bitcoin Fear and Greed Index, a metric tracking relative market sentiment, has hit the lowest levels since January 2023, dropping to 27 on July 9,, according to data from Glassnode.

For reference, January 2023 was only two months following the collapse of the crypto exchange FTX. At the beginning of that month, the Fear and Greed Index stood at 26, while Bitcoin (BTC) was trading at around $16,500. However, by the end of the month, Bitcoin experienced a price rally and was trading around $22,000, data from TradingView shows.

The Bitcoin Fear and Greed Index. Source: Glassnode

German, Mt. Gox selling pressures fuel fears

The current market panic is fueled by the German government dumping its BTC holdings and Mt. Gox repaying creditors, bringing the price of BTC down from around $63,000 at the end of June to lows of around $53,570 on July 5.

The German government is offloading tens of thousands of Bitcoin in multiple tranches. The latest update reveals that it shifted an additional $276 million in Bitcoin to its selling wallet. Data from Arkham Intelligence indicates that the German government still holds around 22,800 BTC.

Mt. Gox repayments have also started, as the now-defunct exchange begins reimbursing roughly $9 billion to creditors. $8.2 billion of the outstanding amount is in Bitcoin, likely to be sold by creditors, adding additional selling pressure and fears that Bitcoin will crash again.

Related: BTC price taps $58K as vital Bitcoin bull market trendline reemerges

The other side of the story

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

The Miner Supply Ratio and Miners Position Index also indicate that miner reserves have been exhausted and that selling pressure from miners should be minimized at this point.

Fund investors reacted to Bitcoin’s recent price decline by buying the dip. According to the June 8 CoinShares Weekly Fund Flows Report, weekly inflows into Bitcoin investment funds reached $398 million, representing the strongest weekly performance for Bitcoin funds in over a month.

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