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Crypto investors have become more greedy as the Bitcoin price broke the $28,000 resistance. The Crypto Fear & Greed Index has now returned to levels not seen since November 2021, right around the time the BTC price hit an all-time high.
Very Greedy Crypto Investors
Since 2023 began, crypto investor sentiment has been on a slow but steady uptrend. It finished 2022 in ‘Extreme Fear’ territory which saw the price drop to new cycle lows. However, the changes so far have been encouraging as the index has now returned to ‘Greed’ levels.
On Tuesday, the Fear & Greed Index hit a new 2023 high of 68, which brought it closer to ‘Extreme Greed’ than ever before. Now, this sentiment analysis is important because it helps to know how investors feel about the market.
When the index is in fear which is a score between 0-47, it shows that investors are very wary of the market, so that new money does not flow into the market. But when the index is in greed, from 53-100, it means investors are very greedy and more inclined to invest.
Crypto Fear & Greed Index recovers to November 2021 levels | Source: alternative.me
This means that the index reaching 68 signals that crypto investors view the market favorably. Since investors are more likely to take risks when they are feeling more optimistic, that can usually translate to higher prices as the market sees more liquidity.
But Will the Bitcoin Rally Follow the Favorable Sentiment?
When the Fear & Greed Index enters greed territory, there is usually an uptrend in price recorded at that time due to the increasing positive sentiment in the market. Given this, there is a possibility that Bitcoin will continue its uptrend, and possibly break the $30,000 resistance.
However, as with the crypto market, the possibility of a downtrend from here cannot be completely eliminated. This is because sometimes, periods of high positive sentiment can also signal a peak, as happened in November 2021. With that said, investors may buy as they take advantage of the gains so far.
At this point, $30,000 is still the level to beat if the digital asset is to fully convince investors that the bull market is back in its glory. A similar trend formed in August 2020 right at the start of a bull market, so it could happen the same way.
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