The Bitcoin Fear and Greed Index reached an index core of 52 over the weekend, marking the first time it reached neutral territory in three quarters.
The highly-referenced Bitcoin Fear and Greed Index moved into neutral territory over the weekend after many months of fear.
On January 15, the index reached a neutral level of 52, its highest reading since April 5, 2022. This move comes after a 24% gain for Bitcoin (BTC) over the last seven days.
The market sentiment tracker reached a multi-year low of nine in June 2022. Since then it has been moving between 20 and 30 in the “extreme fear” category. Moreover, it registered its longest-ever streak of extreme fear in mid-2022, as reported previously.
Notably, the fear and greed index uses “motions and sentiments from different sources,” including market momentum and volume, current volatility, social media, and Google trends data. This data from these sources is then used in the creation of a particular number to summarize the emotional landscape related to Bitcoin and crypto markets.
It consists of five categories ranging from extreme fear to extreme greed, the latter not seen in the market since October 2021. At the time of publication, the index has dropped back to 45, which puts it back into the ‘fear’ category, meaning that confidence is yet to make a full return.
Bitcoin Fear and Greed Index is 45. Neutral
Current price: $20,879 pic.twitter.com/lnj3pd73XL
— Bitcoin Fear and Greed Index (@BitcoinFear) January 16, 2023
In the meantime, Bitcoin has seen its second-longest streak of gains in its entire history, with a 12-day run this month. The asset has already gained 28% since the start of the year, wiping out all the losses in the crash that came after the FTX collapse in early November 2022.
The huge movement has created a massive momentum in technical indicators like the relative strength index (RSI), which has reached its highest level for four years on the daily timeframes. High RSI figures can indicate that an asset is overbought and a correction is imminent.
Highest RSI levels on Daily $BTC chart for 4 years.
Each of the prior 3 touches of the 90 level responded as follows:
Touch 1: BTC continued +18% higher before correcting -12%
Touch 2: BTC continued +16% higher before correcting -21%
Touch 3: No BTC gain and -31% correction pic.twitter.com/swQSLqATIi
— Cold Blooded Shillver (@ColdBloodShill) January 15, 2023
Many analysts have labeled the recent move as a bull trap but a strong weekly close has resulted in some thinking that the momentum will continue.
You could not dream up a more bullish weekly candle. pic.twitter.com/fv66u76ujV
— The Wolf Of All Streets (@scottmelker) January 15, 2023
Peter Brandt, a professional trader, and chart guru, summed it up on January 16, tweeting:
“Any idiot can make wild guesses about markets, so here is my dunce-hat prediction. In reality, nobody has a clue what any given market will do. $BTC.”
Bitcoin was trading up 2.2% on the day at $20,820 at the time of publication, based on CoinGecko data.