The metric that shows general community sentiment towards bitcoin, the fear and greed index, entered the “greed” zone for the first time since March 30, 2022.
This could be the result of the price increase of the main cryptocurrency during the first month of the year and the general revival of the entire market.
Back to ‘Greed’
Contrary to the economic crisis that has spread throughout the world, bitcoin has started the year on the right foot. It is currently trading at around $23,000 (according to CoinGecko), which is an increase of 40% compared to the last day of 2022.
The BTC Fear and Greed Index, which works as a gauge of momentary investor sentiment towards the digital asset, was stuck in “Fear” or “Extreme Fear” territory for several months due to the prolonged bear market and numerous bankruptcies. and scandals in the industry.
However, the rise of the asset seems to have changed the trend, and today (January 27), the metric pointed at 55 – “Greed”. The last time the Index reached that level was approximately ten months ago.
It is worth noting that increased confidence among crypto investors should not be directly seen as a catalyst for a renewed bull run. In fact, the metric being in a state of “Fear” or “Extreme Fear” could indicate a good buying opportunity, while overly greedy investors could mean the market needs to correct.
Could BTC sustain the rally?
The impressive performance of the asset during the first weeks of 2023 led some to believe that a new bull market could be on the way. Coping with the inflationary crisis could potentially help further bitcoin’s rally in the coming months.
Almost every US CPI data announcement has increased BTC’s volatility, and inflation spikes have typically pushed its valuation south. The data showed that US efforts to resolve the issues began to pay off. The inflation rate of the largest economy in the world was 9.1% in June (the highest in 40 years), while the figures for December registered at 6.5%.
Another factor that could affect BTC price performance is the Federal Open Market Committee (FOMC) meetings, where the central bank has announced seven consecutive interest rate hikes in a bid to curb runaway inflation.
The current benchmark index stands at 4.5% (the highest in 15 years), while further increases are expected in the coming months. here is a ready of the CPI calendar and all FOMC meetings until the end of 2023.
Anthony Scaramucci, the founder of SkyBridge Capital, recently opined that the Fed will stop raising interest rates when inflation cools to around 4-5%, which will supposedly stimulate a bull run for digital currencies.
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