The Crypto Fear and Greed Index, a tracking tool for market sentiment in crypto, has surged as high as 79 out of 100, hitting a level not seen since Bitcoin peaked at $69,000 in November 2021.
The increase, observed on February 13, comes as Bitcoin surpassed the $50,000 mark a day earlier.
Crypto Fear and Greed Index Hits ‘Extreme Greed’
For the first time in more than two years, the Crypto Fear and Greed Index is in the “extreme greed” zone, which happens when the value of the index exceeds 74.
Previously, the Index reached extreme levels of “greed,” touching 76 on January 11 amid the excitement surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the United States.
The recent increase in greed occurs a month after the launch of U.S. ETFs, which suggests that the short-term selling associated with the approval news of those financial products has subsided. Cathie Wood, CEO of ARK Invest, had previously anticipated that investors might “sell the news” shortly after approval but emphasized that it would be a temporary phenomenon.
The current “extreme greed” indicator comes as Bitcoin hit $50,000 yesterday, with only around 13% of the total supply now held at a loss.
Based on data from Glassnode, approximately 87% of Bitcoin was acquired below the $48,000 threshold. There is also a notable concentration of short-term holders, defined as those holding for less than 155 days, clustered within the $40,000 to $45,000 range. As for long-term holders, they primarily constitute the remaining 13% of the supply held in a loss position.
The Crypto Market Sentiment Has Been Improving
In June 2022, following the collapse of the UST stablecoin from Terraform Labs, the Crypto Fear and Greed Index plummeted to a minimum value of 9 points, indicating the extreme fear prevalent among investors during that time.
Subsequently, when FTX filed for bankruptcy in November 2022, the index ranged between 23 and 30 points, showing fear.
However, by mid-October 2023, the sentiment began to recover alongside BTC’s price, with the index reaching a neutral level of 52 points. As November and December came about, the anticipation surrounding the potential approval of spot Bitcoin ETFs fueled further growth in the “greed” zone of the metric.
Notably, the Crypto Fear and Greed Index is derived from various signals that influence the behavior of traders and investors, including metrics such as Google Trends, surveys, market momentum and dominance, social media trends, and market volatility.