The Bitcoin Fear and Greed Index – a metric that determines the community’s general sentiment on the primary cryptocurrency – spiked to a state of “Neutral” for the first time in nearly nine months.
The increase comes as a result of BTC’s positive start in 2023.
At last, out of the ‘Fear’ zone
The Bitcoin Fear and Greed Index tracks multiple segments, including price volatility, social media comments, surveys, and others, to display the momentary investor sentiment toward the leading digital asset. It provides results between 0 (“Extreme Fear”) to 100 (“Extreme Greed”).
The Index pointed at 52 yesterday (January 15), meaning it was in “Neutral” territory for the first time since April 5, 2022. It was either in the “Fear” or “Extreme Fear” zones during the past nine months, prompted by the prolonged bear market and the adverse events that surrounded the cryptocurrency industry (the Terra crash, 3AC’s bankruptcy, the collapse of FTX, and many more).
The main reason for the recent surge could be bitcoin’s price increase. The asset has added approximately 25% to its USD value since the start of the year, currently trading at around $20,800. It hit almost $21,500 earlier today (January 16)- a 10-week high.
Despite the promising results, though, the Bitcoin Fear and Greed Index has now returned to the state of “Fear,” dropping to 45.
The entire digital asset sector has seen moments of revival over the last several days, with the global crypto market cap touching the $1 trillion mark during the weekend (on CoinGecko).
Bull run on the horizon?
The last time bitcoin started the year that well was at the beginning of 2021, which prompted some analysts, such as Glassnode’s James Check, to envision the end of the prolonged bear market.
He noted that the two leading cryptocurrencies by market cap – bitcoin and ether – have seen little volatility in the past few weeks. Such periods historically lead to “explosive market moves:”
“It really is quite remarkable, and there are very few instances in history where bitcoin and any digital asset really goes to sleep to this level on a volatility framework.”
Bitcoin’s price was relatively flat between December 2018 and March 2019, hovering around $3,500. In April, though, it started a rally that lasted until July (when BTC was worth nearly $12,000).