Data shows that the Bitcoin Fear & Greed Index has risen back to the neutral zone following the recovery rally in the cryptocurrency’s price.
Bitcoin Fear & Greed Index now has a value of 51
The “Fear & Greed Index” refers to an indicator created by Alternative which measures the average sentiment present among traders in the Bitcoin and broader cryptocurrency markets. The metric uses data from the following five factors to determine investor mindset: trading volume, market capitalization dominance, volatility, social media sentiment, and Google Trends.
The index uses a numerical scale ranging from zero to one hundred to represent this sentiment. All values above 53 correspond to greed among investors, while those below 47 correspond to fear. The area between the two limits obviously corresponds to a net neutral mentality.
Here’s what current Bitcoin market sentiment looks like, according to the Fear & Greed Index:
As visible above, the indicator has a value of 51, which indicates that traders’ sentiment is almost exactly balanced at the moment. This is a notable change in market sentiment compared to just a few days ago.
As shown in the chart, the Fear & Greed Index has been within the fear zone in recent days. The desperation among traders was a result of the bearish price action that BTC recently faced.
At one point the indicator even dropped to a low of 22, reflecting a state of ‘extreme anxiety’. This zone, which is below 25, corresponds to investors being the most bearish on the market. There is also a similar region for the greed side called the ‘extreme greed’ located above 75.
Historically, the extreme sentiments have been quite significant for Bitcoin and other cryptocurrencies, as large tops and bottoms have often formed there. However, the relationship is reversed: extreme fear creates bottoms, while extreme greed enables tops.
Since the extreme low of fear earlier this month, BTC has been on the way up, a possible indication that the opposite signal to sentiment could be in action again.
The cryptocurrency has continued its recovery in a sharp manner in recent days, which could be a possible reason why the Fear & Greed Index has now risen back into neutral territory.
Although, for now, Bitcoin traders are still undecided on whether bullish action will follow next. It now remains to be seen whether they will embrace the greed or remain hesitant about the recovery.
BTC price
At the time of writing, Bitcoin is hovering around $114,900, up 3.6% in the past seven days.