Bitcoin Fear and Greed Index Comes To Neutral After Several Months

For the first time since April 2022, the Bitcoin Fear & Greed Index (FGI) has moved out of the ‘fear’ zone and into ‘neutral.’ This index’s primary objective is to assess the current market sentiments among digital token traders and assist them in determining their next course of action. It should be noted that the Fear and Greed Index does not respond strongly to long-term bull runs, but rather to recent global news events and transient fluctuations in the cryptocurrency market.

Some investors use the fear and greed index as a tool to assess the market. It is predicated on the idea that excessive fear can cause stocks to trade for significantly less than their intrinsic values while unrestrained greed can cause stocks to be bid up significantly above what they should be worth. Since the index promotes a market timing strategy rather than a buy-and-hold strategy, some skeptics discredit the index as a reliable investment tool.

Over the weekend, Bitcoin reached a score of 52 on the index as Bitcoin pushed over $21,000.

As of press time, the score has retraced slightly to the bottom end of the ‘fear’ scale at a rating of 45. The index started the year in the ‘extreme fear’ zone, indicating that bearish sentiment had control of the market at the start of January.

However, as Bitcoin rallied from the $15,600 to $17,200 range held throughout November and December, the FGI moved away from extreme fear.

Bitcoin went into free fall following the collapse of FTX. However, it appears to have recovered to pre-FTX-collapse levels within the past week. The top cryptocurrency by market cap was range bound for roughly 63 days before breaking resistance to break back above $20,000.

The market sentiment tracker hit a multi-year low of nine in June 2022. Since then it has been hovering between 20 and 30 in the “extreme fear” category. Furthermore, it registered its longest-ever streak of extreme fear in mid-2022, as reported by Cointelegraph.

Furthermore, while the FGI may have moved away from ‘fear,’ other global metrics have not shown a similar bullish trend. For example, Google search traffic for the term ‘Bitcoin’ is still at its lowest since December 2020.

Aside from these outlier nations, interest in Bitcoin has undoubtedly waned during the bear market, and the recent rally has not led to a considerable increase in Bitcoin searches globally.

Additionally, a review of sentiment analysis for popular videos, news, and blogs related to Bitcoin showed a peak in positive sentiment on Jan. 15. However, there has been no apparent increase in either positive or negative views over the past 30 days.

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