Sentiment on the cryptocurrency market is beginning to change after long weeks of pessimism. The Crypto Fear & Greed Index, one of the most closely watched indicators of investor sentiment, has moved into the “greed” zone for the first time since October. In Thursday’s update, it reached 61 points, up from 48 the day before, when it was in neutral territory.
This is a significant turnaround after a period of “fear” and “extreme fear” that followed the massive sell-off in October. On October 11, approximately $19 billion “evaporated” from the cryptocurrency markets, causing panic, especially among altcoin investors. The index then fell sharply and repeatedly dropped to low double digits in November and December – some of the lowest in the history of the measurement.
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What does the Fear & Greed Index actually measure?
The Crypto Fear & Greed Index is a tool that attempts to capture investor sentiment across the crypto market. It is based on a combination of several indicators – it tracks price fluctuations of major cryptocurrencies, trading volumes and market momentum, Google search trends, and activity and tone of discussions on social networks. Traders often use it as a guide: it helps them decide whether the market is more favorable for buying, selling, or whether it is better to stay on the sidelines. In times of extreme fear, prices tend to be under pressure, while high “greed” usually signals a growing appetite for risk.
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Bitcoin lifts the mood
The improvement in sentiment goes hand in hand with the growth of bitcoin. Over the past seven days, its price has risen from $89,799 to $97,704, a two-month high. Bitcoin last surpassed the $97,000 mark on November 14—but paradoxically, at that time, there was “extreme fear” in the market as the cryptocurrency plummeted from its historic highs.
The current situation is different—the price is rising, and with it, investor confidence that the market is stabilizing.
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Fewer wallets, fewer bitcoins on exchanges
Analysts at Santiment have also noticed an interesting phenomenon. Over the past three days, 47,244 bitcoin wallets with non-zero balances have disappeared. According to them, this means that some small investors are “dropping out due to fear, uncertainty, and impatience.”
Paradoxically, however, this is a positive sign. “When non-zero wallets are decreasing, it means that the crowd is leaving — and that’s a good sign,” the analysts said. They add that a smaller amount of bitcoins on exchanges reduces the risk of a sudden sell-off. Currently, there are approximately 1.18 million bitcoins on exchanges, which is a seven-month low.
In general, a low volume of bitcoins stored on exchanges is considered a bullish signal. Investors hold their coins in private wallets and are not ready to sell them immediately. The market is therefore less prone to sharp declines.
After months of nervousness, the cryptocurrency market is sending its first cautiously optimistic signals. Although “greed” does not necessarily mean the beginning of a new long-term rally, it shows that investor sentiment has shifted—and that the fear that gripped the market after October’s turmoil is gradually receding.
Sources:
https://alternative.me/crypto/fear-and-greed-index
https://www.coingecko.com/en/coins/bitcoinhttps://x.com/santimentfeed/status/2011493617227960678
