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Crypto Market Goes Into “Extreme Fear”, What’s Next?

Crypto Market Goes Into “Extreme Fear”, What’s Next?
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With the recent crypto market decline, investors have become more fearful of the market. Recorded on the Fear & Greed Index, it shows that this remains an incredibly frightening time for users of cryptocurrencies. In times like these when the prices of digital assets continue to slide down, it is expected that investors become warier. However, this time around, the market had quickly gone into “Extreme Fear” territory with no sign of emerging anytime soon.

Scared Of Investing?

At the start of the month, top cryptocurrencies such as Bitcoin and Ethereum had begun a recovery trend that would eventually wash over the rest of the market. As prices rose, so did positive sentiment among investors who had flooded back into the market. Not long after though, the market had started one of its signature correction trends that comes with the bull rally and now investors have chosen to retreat instead of risk further downside.

Related Reading | CeFi Platform Celsius Restricts Yield Rewards To Only Accredited Investors In U.S.

The Fear & Greed Index shows that the market had been on a downward sliding scale since coming out of last week which had ended with a neutral sentiment from both sides of the market. By Monday however, this had quickly turned into fear with bitcoin finally falling to the $43K territory. Tuesday in itself proved to be worse as the market had indeed fallen into extreme fear, leading to a low score of 20.

Now, while Wednesday is starting out better than what Tuesday ended with at a score of 25, it still does not spell good news for the short term. When investors are scared of the market, they tend to not put any money into it for fear of losing more. This also triggers people taking profits from the market due to fear of their coins dropping further in value. With such low momentum, prices can suffer more instead of staging another recovery.

Is Fear Good For Crypto?

When it comes to how the market is feeling towards cryptocurrencies, it can often be a matter of personal perspective. There are those who believe that steering clear of the market while it is fearful is the best bet and to only invest once the prices start recovering. However, there are those who believe the opposite.

Related Reading | The Ronin Hack Aftermatch: Axie Infinity’s $1M Bug Bounty

Those who subscribe to the “buy the blood” school of thought often welcome downtrends like these since it gives them the opportunity to purchase coins at a “discount.” This mainly comes down to the risk appetite of the investor.

Nevertheless, it still stands to reason that some of the largest rallies have come after the market has consolidated from a price drop. This was the case in late February/early March which had seen the market in extreme fear turn greedy very fast as prices began to recover. 

Total market cap falls to $1.8 trillion | Source: Crypto Total Market Cap on TradingView.com
Featured image from Psychology Today, chart from TradingView.com

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Ripple claims ‘a very big win’ in SEC case

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Ripple Labs has struck a blow against the Securities and Exchange Commission’s (SEC) case after the presiding judge made a ruling that one Ripple community lawyer calls “a very big win for Ripple.”

The SEC filed suit in 2020 against Ripple and executives Brad Garlinghouse and Christian Larsen for selling unregistered securities.

Presiding Judge Sarah Netburn denied the SEC’s request to reconsider shielding documents under privilege related to a June 2018 speech made by SEC’s then-director William Hinman. In the speech, Hinman said Bitcoin (BTC) and Ether (ETH) are not securities.

The SEC previously did not object to those documents falling outside deliberative process privilege (DPP) protection, as it suggested they only concerned Hinman’s personal views and not SEC policies.

The DPP exempts some documents in a case from being disclosed by the government so it can confidentially review existing policy based on the materials of the documents.

The SEC subsequently changed tack to argue the speech reflected Ripple’s policies rather than Hinman’s personal views and should be shielded.

Judge Netburn said the SEC should not contradict itself in trying to flip-flop on its assertions. In her decision, she wrote:

“The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position.”

In summing up the critical aspects of Judge Netburn’s rejection to reconsider, a Ripple community defense lawyer with an extensive case file of financial and SEC cases James K. Filan tweeted today:

Another Ripple community lawyer and founder of CryptoLaw also tweeted today to his 191,000 followers that “The SEC is now in a hurt locker” following Judge Netburn’s ruling.

Despite this seemingly important ruling, the case isn’t winding up yet, and the SEC now has two weeks to appeal the decision.

Much of the crypto industry is fixated on the proceedings of this case as its outcome could spell out the future of SEC filings against crypto companies for sales of unregistered securities.

Related: Greenpeace, Ripple co-founder campaigning to change Bitcoin code

A Ripple victory could see the SEC pull back from its aggressive litigations against the crypto industry. However, if the SEC wins, the floodgates could open and lawyers familiar with crypto will have a cottage industry ready-made for them.