Crypto Fear and Greed Index Returns to Greed as Bitcoin Rally Above $97K
The Crypto Fear and Greed Index touched “Greed” for the first time since the $19B October liquidation event. Bitcoin soared above a two-month high of $97k, helping boost overall crypto market sentiment. Data across the chain showed retail owners exiting, while declining exchange rates eased sales pressure.
The Crypto Fear and Greed Index has returned to “Greed” territory for the first time since October's $19 billion liquidity event, which crippled digital asset markets, while Bitcoin staged a strong recovery, signaling an improvement in investor sentiment.
In an update on Thursday, the index posted a reading of 61, indicating optimism after weeks of “fear” and “extreme fear”.
Just a day earlier, the indicator stood at 48 and put it in the “neutral” zone.
The move marks a significant shift in sentiment among crypto traders following months of high risk aversion.
After the shock of the October liquid, the feeling will return again
Crypto investor sentiment fell on October 11, when $19 billion was withdrawn from the market, sending traders fleeing from altcoins and sending widespread pessimism.
In the weeks that followed, the Crypto Fear and Greed Index recorded some of its lowest readings in November and December, falling into the low double digits multiple times.
The index is closely watched by market participants as a sentiment gauge, which helps traders evaluate whether to buy, sell or stay on the sidelines.
It studies data from multiple indicators, including price volatility of major cryptocurrencies, trading volume, market momentum, Google search trends, and overall sentiment on social media platforms.
The return to “greed” suggests that the extreme caution seen at the end of last year has begun to ease, although the markets are below the levels that previously caused euphoria.
The Bitcoin rally boosts the overall market sentiment
Improving sentiment has been linked to a strong recovery in Bitcoin prices.
According to data from CoinGecko, over the past seven days, Bitcoin has risen above $89,799.
The move marks the first time since November 14 that Bitcoin has traded above $97,000.
At the time of writing, Bitcoin was trading at $96,218, up 1% in the last 24 hours.
At the time, however, the Fear and Greed Index was firmly in “very afraid” territory, as Bitcoin slid sharply from all-time highs.
The recent rally has helped to calm broader market confidence, although traders are wary of sustainability.
While the index's return to “greed” suggests optimism is growing, it is particularly below the level associated with excessive risk-taking.
Signs on the chain indicate retail outlet locations
While price action is improving, some indicators at the chain say retail participation has slowed in recent days. Analysts at market intelligence platform Sentiment said in an X post on Wednesday that Bitcoin holders are reducing their exposure.
According to Sentiment, there has been a net drop of 47,244 bitcoin holders over the past three days, indicating that “retail was being disrupted by FUD and impatience.”
The analysts said, “When non-empty wallets fall, it is a sign that the public is leaving, which is a good sign. At the same time, the supply of exchanges reduces the risk of selling less.”
He added: “This price increase was supported by a 7-month low of 1.18 million bitcoin exchanges.
A low amount of Bitcoin held on exchanges is generally seen as a bullish indicator, as investors are hoarding assets in private wallets and are willing to sell them quickly.
Taken together, the resurgence in sentiment, rising bitcoin prices and declining exchange rates point to a cautiously optimistic outlook for the crypto market, even as investors continue to weigh potential risks.
