Crypto sentiment has turned, market being led by ‘fear’

Apparently, every market seems to have its own risk analysis method. For global stock markets, this is the VIX, or “volatility index.” If the VIX suddenly rises very high, it means investors consider the risk of a crash greater than the likelihood of a new bull run. For crypto, this is called the “fear and greed index” (based on a similarly named indicator from CNN that was invented a decade ago).

If crypto investors expect Bitcoin to go higher, the index will move to “greed.” If there is fear of an impending crash, the index will move to “fear.” The lowest level ever was recorded at the outbreak of the Covid-19 epidemic in 2020. When it became clear that the epidemic would not be limited to Asia alone, the crypto “fear and greed index” fell to its lowest level ever. Bitcoin’s price dropped to $4,000 that day.

ATH

Since its low point in November 2022 (the demise of FTX, at the time one of the largest crypto trading platforms in the world), the index has consistently been quite high, meaning there are more buyers than sellers in the market. A good sign, then. Bitcoin also steadily rose during that period, reaching an ultimate ATH of around $124,000 two weeks ago.

However, last Sunday, for the first time in a long time (not seen since early April and Trump’s introduction of global import tariffs), the index showed ‘fear’ again.

At the time of writing, market sentiment is once again rather “neutral,” but keep a close eye on this indicator.