Crypto Market Sentiment Has Dropped Significantly Through 2022. Most of them were caused by the collapse of multiple companies and the downward spiral of market prices. This caused investor sentiment to bounce between fear and extreme fear for much of the second half of 2022. However, the tide has turned as Bitcoin leads the market in another rally. Investor sentiment is now back to pre-LUNA crash levels.
Crypto investor sentiment returns to green
Having remained in fear territory until the end of 2022, the Fear & Greed Index moved into greed territory for the first time since April 2022. This was at a time when markets were still reeling from the 2021 rally, before Terra’s collapse sparked a terrifying crypto winter.
Now that prices are recovering, so is investor sentiment. We currently have a score of 55 on the Fear & Greed Index, a significant improvement over the past few months. Moreover, the index has been steadily rising since last week.
Sentiment returns to March 2022 levels | Source: alternative.me
It’s not struggling to break out of neutral territory, indicating that investors are happy to accept this as a bull market, albeit a brief one. It also shows that buying sentiment is on the rise as people rush to take advantage of it and make a profit.
The index is now up almost 100% from where it closed at a score of 28 in the last month of 2022.
Crypto Ends A Better Month Than It Started
The crypto market is already in a much better place than when January 2023 first started. Since then, in less than 30 days, the market has added over $200 billion to its market cap, returning to levels not seen since before the FTX collapse.
This much-needed recovery is a step in the right direction, and we are starting to end January better than we started. The market could also grow further as buying sentiment builds around major cryptocurrencies such as Bitcoin and Ethereum.
Cryptocurrency market capitalization is currently just below $1 trillion, but shows potential to rise further. The Federal Reserve is not expected to raise interest rates any further, making it a prime growth environment for risk assets such as cryptocurrencies.
Total market cap adds over $200 billion in January | Source: Crypto Total Market Cap on TradingView.com
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