Cryptocurrency Fear & Greed Index has shifted to 'Greed' for the first time since October

The Cryptocurrency Fear & Greed Index records a “greed” level for the first time since the $19 billion liquidation event in October, marking a positive shift in investor sentiment.

According to the latest update on Thursday, the index reached 61, reflecting a significant improvement in market psychology after weeks of being dominated by “fear” and “extreme fear.” Just one day prior, the index was at 48, in the “neutral” zone.

Cryptocurrency investor sentiment sharply declined on October 11, following a market liquidation of up to $19 billion. As a result, the index continuously dropped to record lows, often remaining in double digits during November and December.

The Crypto Fear & Greed Index first recorded a “greed” level of 61 since October | Source: Alternative.me Cryptocurrency traders often use these sentiment indicators to assess market trends and make buy, sell, or hold decisions.

Bitcoin surges back to a two-month high

Market sentiment has shown signs of recovery alongside Bitcoin’s growth. Over the past seven days, Bitcoin’s price increased from $89,799 to a two-month high of $97,704 on Wednesday.

The last time Bitcoin surpassed $97,000 was on November 14, but at that time, the Fear & Greed index was still in the “extreme fear” zone due to Bitcoin’s sharp decline from its all-time high.

The Crypto Fear & Greed Index is built based on various factors such as price volatility of major cryptocurrencies, trading volume, market momentum, Google search trends, and overall community sentiment on social media platforms.

Bitcoin holders are selling off again, a “good sign”

According to analysis from Santiment, in the past three days, the number of Bitcoin holding wallets has decreased by a net 47,244, indicating that retail investors are selling due to FUD (fear, uncertainty, and doubt), and impatience.

Holders are selling their Bitcoin reserves due to impatience and fear | Source: Santiment “When the number of non-empty wallets decreases, it is a sign that the crowd is retreating from the market, and this is a positive signal. At the same time, the reduction in Bitcoin supply on exchanges also lowers the risk of sell-offs,” Santiment commented, adding that “This price recovery is also supported by the lowest Bitcoin on exchanges in seven months, only 1.18 million coins.”

Typically, when Bitcoin on exchanges is at a low level, it is considered a positive sign because investors tend to hold assets in personal wallets and are less likely to sell immediately.