Over the weekend, the Bitcoin Fear and Greed Index attained an index score of 52, marking the first time it had reached neutral zone in three quarters.
Following several months of anxiety, the widely-referenced Bitcoin Fear and Greed Index moved into neutral territory over the weekend.
The index achieved a neutral level of 52 on January 15, its highest since April 5. The move comes after the BTC had gained 24% in the last seven days.
In June 2022, the market sentiment tracker fell to a multi-year low of 9. It has been fluctuating between 20 and 30 in the “Extreme Fear” category since then. Furthermore, according to Cointelegraph, it recorded its longest-ever streak of intense dread in mid-2022.
The fear and greed index is based on “motions and attitudes from several sources,” such as current volatility, market momentum and volume, social media, and Google Trends data.
Data from various sources is combined to generate a simple number that summarises the emotional condition of Bitcoin and crypto markets.
It is divided into five categories, from extreme fear to excessive greed, the latter of which has not been seen since October 2021.
As of this writing, the index had fallen back to 45, putting it back in the “Fear” category, indicating that confidence has yet to fully recover.
Meanwhile, Bitcoin has had its second-longest winning streak in history, with a 12-day run this month. Since the beginning of the year, the asset has risen 28%, wiping off all losses from the slump that followed the FTX collapse in early November.
The huge momentum has caused a large movement in technical indicators such as the RSI (relative strength index), which has reached its highest level on the daily period in four years.
High RSI values can indicate that an asset has become overbought and that a correction is imminent.
Several analysts have called the latest advance a bull trap, but a strong weekly close has some believing the momentum will continue.
“Any idiot may make wild assumptions about markets, so here is my dunce-hat prediction,” professional trader and chart guru Peter Brandt tweeted on Jan. 16. In reality, no one knows what any specific market will do. $BTC.”
According to CoinGecko, Bitcoin was trading up 2.2% on the day at $21,1652 at the time of writing.