Crypto investors are becoming more greedy with the price of Bitcoin breaking the $28,000 resistance. The Crypto Fear & Greed Index has now returned to levels not seen since November 2021, which was right around the time when the price of BTC hit its all-time high.
Crypto Investors Are Very Greedy
Since 2023 began, crypto investor sentiment has been on a slow but steady uptrend. It finished the year 2022 in the ‘Extreme Fear’ territory which saw prices drop to new cycle lows. However, the change so far has been encouraging as the index has now returned to the ‘Greed’ level.
On Tuesday, the Fear & Greed Index hit a new 2023 high of 68, which brought it closer to ‘Extreme Greed’ than it has ever been. Now, this sentiment analysis is important because it helps to tell how investors are feeling toward the market.
When the index is in fear which is a score between 0-47, it shows that investors are very wary of the market, hence new money isn’t flowing into the market. But when the index is in greed, from 53-100, it means investors are very greedy and are more likely to invest.
This means that the index hitting 68 signals that crypto investors are looking favorably toward the market. Since investors are more likely to take risks when they are feeling more optimistic, it can usually translate to higher prices as the market sees more liquidity.
But Will Bitcoin Rally Following Favorable Sentiment?
During times when the Fear & Greed Index has entered the greed territory, there has usually price uptrends that are recorded at the time due to the heightened positive sentiment in the market. Given this, there is a possibility that Bitcoin will continue its uptrend, and probably break the $30,000 resistance.
However, just as with the crypto market, the possibility of a downtrend from here cannot be completely eliminated. This is because sometimes, periods of high positive sentiment can also signal a top, as it did back in November 2021. As such, investors could dump as they take advantage of the gains so far.
At this point, $30,000 still remains the level to beat if the digital asset is going to completely convince investors that the bull market is back on in its full glory. A similar trend was established back in August 2020 right at the start of the bull market, so this could play out in the same way.