- The Crypto Fear & Greed Index has shifted back into “Greed” for the first time since the $19 billion liquidation event in October
- Bitcoin surged to a two-month high above $97,000, lifting overall crypto market sentiment
- On-chain data shows retail holders exiting the market, while lower exchange balances signal reduced sell pressure
The Crypto Fear & Greed Index has moved back into “Greed” for the first time since the $19 billion liquidation event in October that shook the digital asset market. The shift signals improved investor confidence as Bitcoin staged a robust recovery.
In an update on Thursday, the index posted a reading of 61, reflecting growing optimism after spending several weeks in “Fear” and “Extreme Fear.”
Previously the index read 48, placing it in the “Neutral” zone.
This change marks a notable shift in market sentiment after months of heightened risk aversion among crypto traders.
Confidence rebounds after October liquidation shock
Investor confidence in the crypto space collapsed on October 11 when $19 billion was liquidated from the market, forcing traders out of altcoins and driving widespread pessimism.
In the following weeks, the Crypto Fear & Greed Index recorded some of its lowest-ever readings, slipping into the low double digits multiple times in November and December.
The index is closely watched by market participants as a barometer of sentiment, helping traders decide whether conditions favor buying, selling, or staying on the sidelines.
It aggregates data from a range of indicators, including price volatility of major cryptocurrencies, trading volume, market momentum, Google search trends, and overall social media sentiment.
Returning to “Greed” suggests the caution seen at the end of last year is beginning to ease, though the market remains below the levels associated with the buoyant confidence of earlier rallies.
Bitcoin rally lifts broader market mood
Improved sentiment accompanied a strong rebound in Bitcoin’s price.
Over the past seven days, Bitcoin climbed from $89,799 to a two-month high of $97,704 on Wednesday, according to CoinGecko data.
The move 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% over the prior 24 hours.
Earlier in the cycle, the Fear & Greed Index had resided firmly in “Extreme Fear” as Bitcoin plunged from its record highs.
The recent rally has helped stabilize broader market confidence, even though traders remain cautious about the rally’s sustainability.
Although the index’s return to “Greed” signals rising optimism, it still sits below levels typically associated with excessive risk-taking.
On-chain signals show retail positions exiting
Despite stronger price action, some on-chain indicators point to reduced retail participation in recent days. Analysts at market intelligence platform Santiment noted on X on Wednesday that Bitcoin holders have been trimming risk.
Santiment data shows a net decline of 47,244 Bitcoin holders over the past three days, suggesting “retail has been washed out by FUD and impatience.”
“When non-empty wallets decline, it’s a sign the crowd is capitulating, which can be positive. Similarly, lower exchange supply reduces the risk of forced selling,” the analysts said.
They added that “this price rebound is also supported by a seven-month low of 1.18 million Bitcoin on exchanges.”
Lower exchange-held Bitcoin is often viewed as a bullish indicator because it suggests investors are moving assets to private wallets and are less likely to sell quickly.
Taken together, the recovery in sentiment, higher Bitcoin prices, and falling exchange balances point to a cautiously improving outlook for the crypto market, even as investors continue to weigh lingering risks.