Crypto Investor Sentiment Returns to Bitcoin All-Time High Levels
Crypto Investors Get Greedier With Bitcoin Price Breaking $28,000 Resistance The Crypto Fear & Greed Index has now returned to levels not seen since November 2021, which was exactly when the price of BTC reached its all-time high .
Crypto investors are very greedy
Since 2023 began, sentiment for crypto investors has been on a slow but steady upward trend. It ended the year 2022 in ‘Extreme Fear’ territory which saw prices fall to new cycle lows. However, the change so far has been encouraging as the index has now returned to the ‘Greed’ level.
On Tuesday, the Fear & Greed Index hit a new 2023 high of 68, bringing it closer to “Extreme Greed” than it has ever been. Now, this sentiment analysis is important because it helps tell 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 cautious about the market, therefore new money is not flowing into the market. But when the index is in greed, from 53-100, it means that investors are very greedy and more likely 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 positively. Since investors are more likely to take risks when they feel more optimistic, that usually translates into higher prices as the market sees more liquidity.
But will the Bitcoin rally follow favorable sentiment?
At times when the fear and greed index has entered the greed zone, it usually has price gains recorded at that time due to the increased positive sentiment in the market. Given this, there is a possibility that Bitcoin will continue its uptrend, likely breaking the $30,000 resistance.
However, just like with the crypto market, the possibility of a downward trend from here cannot be completely eliminated. This is because sometimes periods of high positive sentiment can also signal a top, as it did back in November 2021. As such, investors could dump taking advantage of the gains so far.
At this point, $30,000 remains the level to hit if the digital asset is to fully convince investors that the bull market is back in full swing. A similar trend was established back in August 2020 right at the start of the bull market, so this could play out the same way.
