The post Why Recency Bias Is Amplifying Fear Around Bitcoin’s Price appeared on BitcoinEthereumNews.com.

The Crypto Fear and Greed Index dropped to 25 yesterday, signaling “Extreme Fear” in the cryptocurrency market. Yet, an analyst suggests that the current panic might be exaggerated, largely driven by recency bias. This comes as Bitcoin is navigating market volatility triggered by broader macroeconomic conditions. The leading cryptocurrency has fallen 11.4% year to date, reflecting the wider sentiment of fear and uncertainty. Is the Recency Bias Inflating Fear Around Bitcoin’s Price? In the latest X (formerly Twitter) post, analyst Lark Davis highlighted an interesting trend in the Crypto Fear and Greed Index. This sentiment gauge measures market emotions from 0 (Extreme Fear) to 100 (Extreme Greed).  On April 3, it plummeted to a low of 25, indicating heightened anxiety among investors, even though Bitcoin was trading around $80,000. In fact, the latest value of 28 also indicated substantial fear among market participants. Crypto Fear and Greed Index. Source: Alternative.me Nonetheless, according to Davis, the sentiment was out of place, given Bitcoin’s price performance. He noted that the index’s decline contrasted with market conditions six months prior. Despite Bitcoin trading at $65,000, the index showed a neutral reading then. “This is what’s called “recency bias,” and you can leverage it,” he wrote. For context, recency bias refers to the tendency of investors or traders to give more weight to recent events or information when making decisions while disregarding longer-term trends or data. This psychological bias often leads to overreaction to short-term market movements, such as a sudden price spike or a crash. “So that’s why we’re seeing higher fear readings at today’s $80,000, than yesterday’s $65,000,” David remarked. He suggested that the fear seen in the market is not entirely justified and that reactions to short-term fluctuations are often more extreme than necessary. This coincides with Bitcoin continuing to see…

---

Filed under: News - @ April 4, 2025 6:27 am