The highly referenced Bitcoin Fear and Greed Index moved into neutral territory over the weekend after several months of fear.
On January 15, the index it reached a neutral level of 52, the highest since April 5. The move follows a 24% gain for BTC over the past seven days.
The market sentiment tracker hit a multi-year low of 9 in June 2022. Since then, it has been oscillating between 20 and 30 in the “Extreme Fear” category. Furthermore, it recorded its longest streak of extreme fear in mid-2022, Cointelegraph reported.
The Fear and Greed Index uses “movements and sentiment from a variety of sources,” including current volatility, market momentum and volume, social media, and Google Trends data, among others.
Together, the data from these sources is used to create a simple number to summarize the emotional state regarding Bitcoin and the crypto markets.
It consists of five categories ranging from extreme fear to extreme greed, the latter not seen since October 2021.
As of this writing, the index has fallen back to 45, putting it back in the “Fear” category, suggesting that confidence has not fully returned yet.
Bitcoin’s Fear and Greed Index is 45. Neutral
Current price: $20,879 pic.twitter.com/lnj3pd73XL— Bitcoin Fear and Greed Index (@BitcoinFear) January 16, 2023
Meanwhile, Bitcoin has seen its second longest streak earnings on record with a 12-day run this month. The asset has gained 28% since the beginning of this year, wiping out all losses in the crash that followed FTX’s collapse in early November.
The massive momentum has created a huge move in technical indicators such as the RSI (Relative Strength Index) which has hit its highest level in four years on the daily time frame.
High RSI figures may suggest that an asset is overbought and a correction is in order.
Higher RSI levels on Daily $BTC 4 year letter
Each of the previous 3 touches from level 90 responded as follows:
Touch 1: BTC continued +18% higher before correcting -12%
Touch 2: BTC continued +16% higher before correcting -21%
Tap 3: No BTC Gain and -31% Correction pic.twitter.com/swQSLqATIi
— Cold Blooded Shillver (@ColdBloodShill) January 15, 2023
Related: Bitcoin Fails To Convince Fund Is In With $12K ‘Still Likely’
Several analysts have called the recent move a bull trap, but a strong weekly close has led some to believe the momentum will continue.
$BTC Weekly
You couldn’t dream of a more bullish weekly candlestick. pic.twitter.com/fv66u76ujV
— The wolf of all streets (@scottmelker) January 15, 2023
Professional trader and charting guru Peter Brandt summed it up on January 16, tweeting:
“Any idiot can make wild guesses about the markets, so here is my dumb prediction. In reality, no one has any idea what a given market will do. $BTC”.
Bitcoin was trading up 2.2% on the day at $21.1652 at the time of writing, according to CoinGecko.
