Popular Crypto Analysis Tool Indicates That BTC Price Is Undervalued

According to its latest data, the fear & greed tool, which is hugely popular among crypto traders, suggests that there is investor phobia over the digital asset space. The tool’s current value of 27% is the lowest over the last 12 weeks. Often, analysts combine the information from this index with other technical tools to predict the possibility of a rally or plunge by a digital asset. Consequently, the analysts can determine entry or exit trade points.

The tool’s maximum value is 100, and the closer the tool’s value is towards this maximum, the higher the greed exhibited by investors. Thus, indicating price inflation for most digital assets and a possible price plunge in the short term. 

Conversely, a value closer to the minimum (zero) indicates extreme fear among investors. Hence, its current value of 27 indicates investor fear and an undervaluation of the BTC price. The index’s latest score of 27 comes amidst a 10.5% loss by BTC to now trade a little over $43K. July 26, 2021, was the last time the index gave this low value.

June 24 – September 20, 2021 fear & greed index. Source: Alternative.me

Its score of 10 on July 21, 2021, was a 12-month low. But the score rose to its highest in five months when the index displayed a score of 79 between last month and the first week of this month. This high score coincides with the period when prices of almost all the digital assets rose to double figures.

Evergrande Receives Almost $20B Bailouts From Chinese Authorities 

News of real estate behemoth Evergrande’s debt issues caused a massive plunge to the global financial markets. Some analysts also opined that the China-based company’s issues might be responsible for the recent decline across the virtual asset market in the last seven days because investors panicked and started selling their crypto investments.

But Evergrande’s woes might be soothed even if it’s temporary. Bloomberg reports that China’s apex bank has announced that it would give the real estate giants $19B to bail it out of its current predicament. Financial experts have predicted that the conglomerate’s issues will cause severe ramifications. 

Hence, the country’s authorities will do everything possible to prevent it from collapsing. These experts seem to be right based on this Bloomberg report. Hence, it is possible that prices of digital assets will turn green again after being in the red since the debt news broke out.

Evergrande Bailout And The Crypto Market

Historically, September is usually a bearish month for the crypto market. But the Evergrande news only spiked the bearishness. In the last seven days, the market cap of most digital assets declined by 25%, and the market cap of the entire crypto market was not up to $2 Tr.

But China’s bailout might return bullishness to the virtual asset market. Hence, many analysts are predicting that the crypto market will be bullish by next just as it was last month, and BTC will set a new peak price before this year ends.