Data shows that Bitcoin’s fear and greed index shows improvement after the recent price spike, but its value remains within the extreme fear zone.
Bitcoin witnessed a sharp rise in price in the past day
Bitcoin ended last week on a mixed note, initially surging to around $74,000 on Friday, before falling back to low-$70,000 levels within the same day. Although the asset stabilized over the weekend, the new week appears to have brought fresh bullish momentum as BTC rose again.
As the chart below shows, Bitcoin further outperformed Friday’s gains this time, reaching $74,400 at one point.
The cryptocurrency has pulled back a bit from its highs, but its current value is $73,200, still up more than 7% on a weekly basis. BTC is not the only one showing bullish movement, as altcoins are also trending upward. Ethereum, the second-largest digital asset, posted an even better return than Bitcoin, gaining 13% for the week.
Trader sentiment has been depressed recently due to prolonged bearish price action, but the renewed recovery has led to some improvement.
BTC Fear and Greed Index is currently on the edge of extreme fear territory
“Fear & Greed Index” refers to an index created by Alternatives that indicates the average sentiment that exists among investors in Bitcoin and the broader cryptocurrency market. The index uses data from five factors to determine trader sentiment: market capitalization advantage, trading volume, volatility, social media sentiment, and Google Trends. A numerical scale from 0 to 100 is used to represent emotions.
Any value above 53 on this scale corresponds to the emotion of greed, and any value below 47 corresponds to the emotion of fear. Values in between imply net-neutral market sentiment. In addition to these three core zones, the index also has two extreme regions called Extreme Fear (below 25) and Extreme Greed (above 75).
As the chart below shows, all recent bearish price action has pushed the market down into one of these extreme zones.
The graph shows that the Fear and Greed index has steadily improved this month since falling deep into the extreme fear zone in February. In particular, the recent surge in Bitcoin’s recovery has caused a notable rise in the index.
However, trader sentiment has still not improved enough to move us out of the extreme fear zone. Nevertheless, at the current value of 23, the index is very close to transitioning into normal fear territory.
