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With the Bitcoin (BTC) price diving below a $ 29,000 thresholdInvestors mood is deteriorating and the Crypto Fear and Greed index has fallen to the October 2020 levels.

On January 22, the Crypto Fear and Greed index is sharp dropped to a value of 40, shifting market sentiment from ‘Extreme Greed’ to ‘Fear’. The index fell for the first time since October 3, 2020, when Bitcoin traded around $ 10,500.

Crypto Fear and Greed Index one-year chart. Source: Alternative.me

Similar to the indexes for fear and greed in the traditional marketsThe Crypto Fear and Greed Index is a tool that measures two of the primary emotions that affect how much investors are willing to buy cryptocurrencies such as Bitcoin.

According to Alternative.me, the extreme level of fear could be a sign that investors are too concerned, which could mean a good buying opportunity. On the other hand, if investors get too greedy, it could be a sign that the market is in need of a correction.

Indeed, before falling to 40, the Crypto Fear and Greed Index hit a high of 95 on January 6, showing that investors got very greedy in the midst of Bitcoin hits its all-time high of $ 42,000 on January 8. Bitcoin price subsequently underwent a major correction, falling to USD 28,750 on January 21.

Source: Alternative.me

As Bitcoin has undergone a sharp correction in recent days, more people in the industry have commented on the price movements. On Jan. 21, Scott Minerd, chief investment officer at financial services company Guggenheim, predicted that Bitcoin is poised to drop to $ 20,000. The director still believes Bitcoin will reach $ 400,000 in the long run, but not this year.

Mike Novogratz, the founder of Galaxy Digital, is confident that Bitcoin will recover. He tweeted on January 21: “People are not supposed to live in environments of 150% full. That was the telling. When the volume recedes, we’ll drop, base and resume the rally. “

At the time of publication, the Bitcoin price is around $ 31,000. The world’s largest cryptocurrency has fallen more than 10% in the last 24 hours, but is still up about 30% in the past 30 days, according to Cointelegraph’s Bitcoin price index.