- The Crypto Fear and Greed Index moved into “greed” for the first time since the October $19 billion liquidation event.
- Bitcoin climbed to a two-month high above $97,000, helping raise overall sentiment across the crypto market.
- On-chain data shows retail participation has declined, while falling exchange balances point to reduced selling pressure.
The Crypto Fear and Greed Index has returned to “greed” for the first time since the $19 billion liquidation shock in October, signaling an improvement in investor sentiment as Bitcoin staged a notable recovery.
In its Thursday update, the index registered a reading of 61, reflecting rising optimism after weeks dominated by “fear” and “extreme fear.”
Just one day earlier the index stood at 48, which placed it in a “neutral” zone.
The shift marks a meaningful change in mood after months of heightened caution among crypto traders.
Sentiment rebounds after the October liquidation shock
Crypto investor sentiment collapsed on October 11 when $19 billion was liquidated from the market, prompting traders to exit altcoins and triggering widespread pessimism.
In the weeks that followed, the Crypto Fear and Greed Index posted some of its lowest readings, slipping into the low double digits multiple times in November and December.
The index is closely watched by market participants as a gauge of prevailing sentiment, helping traders decide whether conditions favor buying, selling, or standing aside.
It aggregates data from several indicators, including price volatility for major cryptocurrencies, trading volume, market momentum, Google search trends, and social media sentiment.
The return to “greed” indicates the acute caution seen late last year has begun to ease, though overall sentiment remains well below levels that historically correspond with euphoria.
Bitcoin rally lifts broader market sentiment
The improved mood has coincided with a strong upswing in Bitcoin prices.
Over the past seven days, Bitcoin rose from $89,799 to a two-month peak of $97,704 on Wednesday, according to CoinGecko data.
That marked the first time Bitcoin traded above $97,000 since November 14.
At the time of writing, Bitcoin was trading at $96,218, up about 1% in the last 24 hours.
Earlier in the recent sell-off, the Fear and Greed Index had been stuck in “extreme fear” territory as Bitcoin tumbled from record highs.
The latest rally has helped stabilize broader market confidence, although traders remain cautious about its durability.
While the index’s move back into “greed” signals growing optimism, it still sits well below thresholds typically associated with excessive risk-taking.
On-chain signals show retail positions unwinding
Despite improved price action, several on-chain indicators point to reduced retail participation in recent days. Analysts at market intelligence platform Santiment noted in a post on X that Bitcoin holders have been reducing exposure.
Santiment reports a net decline of 47,244 Bitcoin holders over the past three days, suggesting “retail has bowed out due to FUD and impatience.”
“When non-empty wallets decrease, it’s a sign the crowd is pulling back — a constructive signal. Likewise, lower exchange supply reduces the risk of sudden sell-offs,” the analysts said.
They added that the recent price rise has also been supported by a seven-month low of 1.18 million Bitcoin held on exchanges.
A smaller exchange-held supply is generally viewed positively, as it implies more investors are moving assets into private wallets and are less likely to sell quickly.
Overall, the uptick in sentiment, rising Bitcoin prices, and declining exchange balances point to a cautiously improved outlook for the crypto market, even as investors weigh ongoing risks.