Why Recency Bias Is Amplifying Fear Around Bitcoin’s Price

The Crypto Fear and Greed index fell to 25 yesterday, signaling an “extreme fear” on the cryptocurrency market. However, an analyst suggests that current panic could be exaggerated, largely motivated through recence.

This occurs while Bitcoin sails on market volatility triggered by wider macroeconomic conditions. The main cryptocurrency fell 11.4% over a year to date, reflecting the broader feeling of fear and uncertainty.

Does the recence bias inflate fear around the price of Bitcoin?

In the last article of X (formerly Twitter), analyst Lark Davis highlighted an interesting trend in the Crypto Fear and Greed index. This feeling of feeling measures the emotions of the 0 (extreme fear) at 100 (extreme greed).

On April 3, he dropped to a minimum of 25, indicating increased anxiety among investors, even if Bitcoin was negotiated about $ 80,000. In fact, the last value of 28 also indicated a substantial fear among market players.

Nevertheless, according to Davis, the feeling was out of purpose, given the performance of Bitcoin prices. He noted that the decline in the index contrasts with the conditions of the market six months earlier. Although Bitcoin is negotiated at $ 65,000, the index showed a neutral reading at the time.

“This is called the” recess bias “and you can take advantage of it,” he wrote.

For the context, the recess bias refers to the trend of investors or traders to give more weight to recent events or information when making decisions while ignoring trends or longer -term data. This psychological bias often leads to an excessive reaction to short -term market movements, such as a sudden price peak or an accident.

“This is why we see higher fear readings at $ 80,000 today, that the $ 65,000 yesterday,” said David.

He suggested that the fear observed on the market is not entirely justified and that short -term fluctuations are often more extreme than necessary.

This coincides with Bitcoin which continues to see the fluctuations among President Trump’s pricing plans and fears of a potential recession. Although it remains relatively stable compared to traditional markets, the drop in the value of Bitcoin has further raised doubts about its stability and its long -term potential.

In particular, Michael Saylor, president of the strategy (formerly Microstrategy), stressed that short -term volatility does not reflect the long -term Bitcoin potential.

“Bitcoin is the most volatile because it is very useful,” he said.

Saylor explained that the volatility of Bitcoin is largely due to its liquidity and 24/7 availability, which means that it is more likely to sell rapid during market panics. However, Saylor has reiterated that if Bitcoin behaves like a short -term risk asset, its long -term value is not affected by these fluctuations, strengthening its role of reserve of value.

Meanwhile, Arthur Hayes, the former CEO of Bitmex, provided another perspective on the current market conditions.

“Some of you run all cases, but I like prices,” said Hayes.

According to Hayes, global economic imbalances will eventually be corrected. Although short -term market pain is inevitable, Hayes predicts that the solution will likely imply the impression of more money, which it considers as beneficial for bitcoin.

“The $ weakens alongside foreigners selling American technological actions and reports money at home. It is good for the BTC and gold in the medium term,” he planned.

His comments align with the recent Beincrypto report on the opposite correlation between the US dollar index (DXY) and the BTC. Thus, a drop in the first could benefit the second.

For the moment, Bitcoin continues to see modest losses. During last week, it decreased by 4.5%. Meanwhile, the part lost 1.0% of its value in the last day. At the time of writing this document, Bitcoin was negotiated at $ 82,855.