Investors of cryptocurrencies they have set aside the prevailing fear in 2022, and with bitcoin on the rise the so-called fear and greed index is approaching its highest since November 2021.
In the same way that extreme fear can be the prelude to a resurgence in buying, crypto investors are watching the evolution of greed levels to assess the continuation of the 70% bullish rally registered by the bitcoins in 2023.
Just like the ‘fear index’ (VIX) acts as a reference on the Stock Market, cryptocurrencies have their particular indicator of fear and greed. The scale from 0 to 100 is divided into five large levels. From 0 to 20 reflects “extreme fear”; from 20 to 40 it trades in the “fear” zone; from 40 to 60 it moves in the “neutral” zone; 60 to 80 indicates levels of “greed” and 80 to 100 shows “extreme greed.”
Normally, if investors predict bearish movements in bitcoin prices, the index points to levels below 40 points, reflecting market fear.
On the contrary, if they anticipate increases in the price, the indicator confirms greed through levels above 60 points.
As of today, with bitcoin skyrocketing 70% so far this year, the fear and greed index stands at 62 points, a moderate level of greed.
The current 62 points significantly improve the lows of 33 points it reached last March at the start of the banking storm, and more than double the 27 points with which it began 2023.
The improvement pushes the indicator of fear and greed one step away from the 68 points it touched in March, its highest since November 2021, just the month that saw the historical record reached by bitcoin, on the verge of 70,000 dollars. On these same dates, coinciding with the ceiling registered in the bullish cycle of bitcoin, the index entered levels of “extreme greed” by exceeding 80 points.
In fact, experts highlight that extreme levels of both fear and greed can be interpreted as the prelude to a change in trend in the crypto market, as happened with the extreme greed reflected in November 2021 and with the extreme fear of 2022.
Despite the notable improvement accumulated by this crypto indicator in the last month, the current 62 points are still far from the extreme levels of greed resulting from levels above 80 points.
