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Crypto market sentiment plummeted into 2022. Most of it was fueled by many companies collapsing, sending market prices spiraling down. This sent investor sentiment bouncing between dread and extreme fear during the better second half of 2022. However, that has changed as bitcoin led the market in another rally. Investor sentiment has now returned to pre-LUNA crash levels.
Crypto Investor Sentiment Turns Green Again
After sitting in fear territory until the end of 2022, the Fear & Greed Index has now moved into greed territory for the first time since April 2022. More interestingly, the index is currently sitting at levels around the time since the LUNA crash. That was when the market was still reeling from the 2021 rally before Terra’s collapse sparked the dreaded crypto winter.
Now, as prices are recovering, so is investor sentiment. It currently sits at a score of 55 on the Fear & Greed Index, indicating a significant improvement over the last few months. What’s more, the index shows a steady increase over the past week.
Sentiment returns to March 2022 levels | Source: alternative.me
It is no longer struggling to exit neutral territory, indicating that investors are now comfortable accepting this as a bullish rally, even if it is short. It also shows an improved buying sentiment as investors rush to take advantage of the high prices and record some gains.
The index is now up nearly 100% from its close in the last month of 2022 with a score of 28. This offers a complete 180 degree change in how investors have viewed the market over the years.
Crypto Ends The Month Better Than It Started
The crypto market is already in a much better place than when January 2023 first started. In less than 30 days, the market has added over $200 billion in market cap, bringing it back to levels not seen since before the FTX collapse.
This much needed recovery is a step in the right direction and it takes January to a point where it finishes the month better than when it started. And as buying sentiment around leading cryptocurrencies like Bitcoin and Ethereum has ballooned, the market may still have more growth to come.
The crypto’s total market cap now sits just under the $1 trillion mark but still points to the potential for more upside. As the Fed is not expected to raise interest rates further, this is becoming a prime growth environment for risk assets like cryptocurrencies.
Total market cap adds over $200 billion in January | Source: Crypto Total Market Cap on TradingView.com
Follow Best Owie on Twitter for market insights, updates and the occasional funny tweet… Featured image from Masterworks, chart from TradingView.com
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