Cryptocurrency Fear and Greed Index Returns to Neutral Amidst Recent Developments

Cryptocurrency Fear and Greed Index Returns to Neutral Amidst Recent Developments

The crypto fear and greed index have reverted to neutral levels, marking a significant shift following a surge in the previous week.

Bitcoin Market Sentiment at a Low

As reported by Alternative.me, on January 15th, the fear and greed index dropped to levels last seen in October 2023. This decline coincided with the approval of the first spot Bitcoin (BTC) ETFs in the United States.

According to the index, Bitcoin’s market sentiment score now stands at 52 out of a possible 100, marking the lowest point since October 19th of the previous year. At that time, BTC traded at an average daily price of approximately $31,000.

Recent Fluctuations and Extreme Greed

Interestingly, just a few days prior, the index had recorded an “extreme greed” reading of 76. This spike occurred as the market eagerly awaited the approval of spot Bitcoin ETFs.

Understanding the Fear and Greed Index

The fear and greed index serves as a numerical representation of the emotions and sentiments prevalent among crypto market participants. It derives insights from six crucial market indicators, each weighted accordingly: volatility (25%), market momentum and volume (25%), activity on social networks (15%), survey data (15%), BTC dominance (10%), and trends (10%).

SEC Approval Triggers Market Response

On the evening of January 10th, the U.S. Securities and Exchange Commission (SEC) announced the approval of 11 applications for spot exchange-traded funds based on the leading cryptocurrency. Notable issuers in this approval include Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity, and Franklin Templeton.

Unraveling the X Incident

In anticipation of approval in X, a fabricated SEC message circulated, falsely stating that the commission had already approved the ETF. The regulator later clarified that their account had been compromised, triggering significant fluctuations in Bitcoin prices.

Conclusion: Navigating Crypto Sentiments

As the crypto fear and greed index returns to neutral, it underscores the impact of significant events, such as ETF approvals, on market sentiments. Understanding these fluctuations is crucial for investors navigating the dynamic landscape of the cryptocurrency market.

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