The metric showing the community’s general sentiment toward bitcoin – the Fear and Greed Index – entered into the “greed” zone for the first time since March 30, 2022.
This could be a result of the price increase of the primary cryptocurrency during the first month of the year and the overall revival of the entire market.
Back to ‘Greed’
Contrary to the economic crisis that has spread across the globe, bitcoin has started off the year on the right foot. It currently trades at around $23,000 (according to CoinGecko), which is a 40% increase compared to the last day of 2022.
The BTC Fear and Greed Index, which works as an indicator of momentary investor sentiments towards the digital asset, was stuck in the “Fear” or “Extreme Fear” territory for several months because of the prolonged bear market and the numerous bankruptcies and scandals in the industry.
However, the asset’s spike 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 the increased confidence among crypto investors should not be directly considered 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 too greedy investors could mean that the market is due for a correction.
Could BTC Sustain the Rally?
The asset’s impressive performance during the first several weeks of 2023 prompted some to believe that a new bull market could be approaching. Coping with the inflationary crisis could potentially aid a further rally of bitcoin throughout the next months.
Almost every announcement of the US CPI numbers has brought enhanced volatility for BTC, and usually, inflation spikes have pushed its valuation south. Data showed that the US efforts to solve the problems started giving results. The inflation rate in the world’s biggest economy was 9.1% in June (the highest in 40 years), while December’s figures clocked in at 6.5%.
Another factor that could affect BTC’s price performance is the Federal Open Market Committee (FOMC) meetings, where the central bank has announced seven consecutive interest rate hikes in an attempt to bring the galloping inflation down.
The current benchmark stands at 4.5% (the highest in 15 years), while more increases are expected in the following months. Here is a list of the CPI calendar and all the 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 off at around 4-5%, which will supposedly stimulate a bull run for digital currencies.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.
Be the first to comment