Popular cryptocurrency analyst Benjamin Cowen pointed out an overlooked indicator that Bitcoin (BTC) has the potential to rise significantly more soon.
In his new video, Cowen talked about the Fear and Greed Index, which measures sentiment in crypto markets. Cowen described the index with the 90-day simple moving average (SMA) to point to historical patterns. The analyst says that when the 90-day SMA on the Fear and Greed Index drops below 30, BTC often bottoms out and ignites rallies.
“As long as you have the right perspective, i.e. you don’t think it needs to rise tomorrow, speaking of some kind of situation like 2018, let’s say this may still be a few months away. But historically, when the Fear and Greed Index’s 90-day moving average is below 30, it tends to be a pretty attractive area.”
The closely-followed analyst says that historically, people typically get the direction of the markets wrong, emphasizing the index’s utility. He states that for some time now, the 90-day SMA of the index has been below its key level.
“Overwhelmingly, most people seem to want to buy only when the market is bullish, but really, if there are any indications, buying when the market is down seems to work much better. When you look at the 90-day moving average, you can actually see that it has been below the 30 mark since mid-February, and we are still below it even now. Again it is a lagging indicator so it will not work perfectly. If Bitcoin price returns, I imagine the Fear and Greed Index could stay below 30 for a while.”
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