- The Crypto Fear and Greed Index entered the “greed” zone for the first time since the $19 billion liquidation event in October.
- Bitcoin climbed to a two-month high above $97K, helping lift overall crypto market sentiment.
- On-chain data shows retail holders exiting, while falling exchange balances point to reduced selling pressure.
The Crypto Fear and Greed Index has moved back into the “greed” zone for the first time since the $19 billion liquidation event in October that shook digital asset markets, signaling an improvement in investor sentiment as Bitcoin staged a strong recovery.
In an update published on Thursday, the index registered a value of 61, reflecting growing optimism after weeks of readings in the “fear” and “extreme fear” categories.
Just one day earlier the index read 48, placing it in the “neutral” range.
This shift marks a notable change in mood after months of heightened risk aversion among crypto traders.
Sentiment rebounds after October liquidation shock
Investor sentiment in the crypto market plunged on October 11, when roughly $19 billion was liquidated, prompting traders to flee altcoins and triggering widespread pessimism.
In the weeks that followed, the Crypto Fear and Greed Index recorded some of its lowest readings, falling into the low double digits multiple times in November and December.
Market participants closely monitor the index as a sentiment barometer that helps traders assess whether conditions favor buying, selling, or staying on the sidelines.
The index aggregates data from several indicators, including price volatility of major cryptocurrencies, trading volume, market momentum, Google search trends, and overall sentiment across social media platforms.
The return to “greed” suggests the acute caution seen at the end of last year has begun to ease, although readings remain well below levels that previously indicated euphoria.
Bitcoin rally boosts overall market mood
The sentiment improvement coincided with a significant rebound in Bitcoin’s price.
Over the past seven days, Bitcoin rose from $89,799 to a two-month high of $97,704 on Wednesday, according to CoinGecko data.
This move marks the first time Bitcoin has traded above $97,000 since November 14.
At the time of writing Bitcoin was trading at $96,218, up about 1% over the previous 24 hours.
During the earlier sell-off from record highs, the Fear and Greed Index had plunged deep into “extreme fear.”
The latest rally has helped stabilize broader market confidence, even as traders remain cautious about its durability.
While the index’s return to “greed” points to rising optimism, it still sits well below levels typically associated with excessive risk-taking.
On-chain signals show retail exits
Despite improving price action, some on-chain indicators suggest retail participation has declined in recent days. Analysts at market intelligence platform Santiment noted on X that Bitcoin holders have been trimming exposure.
Santiment reported a net decline of 47,244 non-empty Bitcoin wallets over the past three days, indicating that “retail was stopped by FUD and impatience.”
“When non-empty wallets fall, it’s a sign the crowd is stepping back — which can be positive. Likewise, less supply on exchanges reduces the risk of a sell-off,” the analysts said.
They added that the recent price rise is supported by a seven-month low of 1.18 million Bitcoin held on exchanges.
A lower amount of Bitcoin held on exchanges is generally viewed as a bullish signal because it suggests investors are moving assets into private wallets and are less likely to sell quickly.
Taken together, the recovery in sentiment, rising Bitcoin prices, and falling exchange balances point to cautiously improving prospects for the crypto market, even as investors continue to weigh ongoing risks.