The widely used Bitcoin Fear and Greed Index entered a neutral zone after several months of fear, over the weekend. The indicator rose to its highest point since April 5, 2022, a neutral level of 52, on January 15. The action comes after Bitcoin’s (BTC) 24.9% increase over the previous seven days.
In June 2022, the market sentiment tracker fell to a multi-year low of nine. Since then it has been ranging between 20 and 30 in the “severe terror” category. In mid-2022, it also had its longest stretch of extremely terrifying events.
At the time of writing, the index has dipped back down to 45, which puts it back into the “fear” category, suggesting that confidence has yet to make a full return.
The fear and greed index draws its “motions and attitudes from several sources,” such as the volatility of the market right now, market volume and momentum, social media, and Google trends data. The information gathered from various sources is then utilized to calculate a single figure that captures the emotional climate surrounding the BTC and cryptocurrency markets. Excessive fear and extreme greed are among its five categories; the latter hasn’t been seen since October 2021.
Is Bitcoin Rallying?
Meanwhile, Bitcoin has seen its second-longest streak of gains in history, with a 12-day run this month. Since the start of the year, the asset has increased 28%, wiping off all losses from the fall that followed the FTX collapse in early November 2022. Technical indicators like the RSI (relative strength index), which recently reached its highest level on the daily timeframes, have moved significantly as a result of the strong momentum. High RSI values may indicate that a correction is overdue and that an asset is overbought.
A strong weekly closing has given some reason to assume the momentum will continue despite the fact that several analysts have called the recent surge a bull trap. Peter Brandt, a seasoned trader and expert in charts, summed it up in a tweet on January 16 by asserting that anybody may make irrational market predictions, and that no one can anticipate what any specific market will do. At the time of writing, Bitcoin was trading at $21,165, up 2.2% on the day, according to CoinGecko.