The Crypto Fear & Greed Index, a barometer of sentiment in the cryptocurrency space, fell to Trump Win December 2016 levels last month. Monday closed at 70, a level witnessed before Trump’s decisive victory, a long way from the extreme greed the market demonstrated immediately after the election.
This index is based on a scale of 0 to 100, where readings closer to 0 are considered to indicate extreme fear, while on the other hand, readings in the high 90s and 100 are associated with extreme greed. It is common among trader budgets and investors who use this basic concept to decide to purchase and sell according to which aspect of the market is more dominant, either fear or greed.
Bitcoin Fear and Greed Index is 70 – Greed
Current price: $94,586
Follow on Telegram: https://t.co/XKOdVF2cCZ pic.twitter.com/VGNZJMlDui— Bitcoin Fear and Greed Index (@BitcoinFear) December 23, 2024
Trump’s Victory Triggered Crypto Greed, Sentiment Now Wanes
After Trump was elected, the index rose to 94, which shows that the stock market might reach a high level of greed and overvaluation. This proved to be one of the most positive phases for the crypto market since investors were betting on the general economic effects of Trump’s regain of the presidency, which overall supports cryptography products.
But sentiment, as reflected in the index, has recently come down to 70. Therefore, it may be assumed that it has cooled down. Thus, the share market’s optimism has only become greed-induced instead of the earlier irrational exuberance, which may be due to better risk perception. Analysts know that at 90, greed leads to the formation of bubbles, but at 70, warning signs begin to be noticed involving corrections or overvaluation.
Similarly, Bitcoin, an index for the market, has responded to this change of attitude. The cryptocurrency is currently worth around $94884 but has declined by more than 8% in the current week. According to some experts, Bitcoin’s tendency to fluctuate highly correlates with investors’ emotions, including greed in the early bull stages and fear in the late stages of this year’s bubble.
Although it has since eased in the current year, Bitcoin is still trading far above its price point in the first half of 2024. The current decline is considered short-term as a cyclical variant of the general paradigm without automatically signaling a coming long-term decline. Still, a word of prudence fits nicely here.
In the past, the holiday season has proven to be a time when the future of Bitcoin is most obscure. James Toledano, the Unity Wallet chief operating officer, said that the market is unpredictable and like water that will always be wet. However, there is fluctuation, as seen with Bitcoin.
“Bitcoin is always volatile. It then attributed the high interest rate to a lack of influence from festive occasions such as during the holiday season or at the beginning of the new year, he said. “Sometimes it goes up at the beginning of the year; other times it comes down. In the past, the performance of Bitcoin at the end of the year has been nothing more than average at best.”
Toledano pointed out that little cash on the street means that during the festive season, the market swings can be exaggerated, albeit institutional trading is unlikely to be a huge factor. He also discussed how macroeconomic factors or some small changemakers shift the market liter.
“This year, they will largely rely on the remaining ETF approvals of 2024, the Trump factor, and general tendencies. A quiet period can be evident; however, the market may experience further active exploits after some unexpected news. When pro-Bitcoin Trump returns to the White House on January 20th, the Bitcoin price will likely rise again very soon, Toledano elaborated.
Investors are keenly observing the Crypto Fear and Greed Index to identify when the next changes will occur as the market approaches the end of the year. Given that Bitcoin price is close to its all-time highs and the market is now wading through the consequences of Trump’s return, there is more volatility in store for early 2025.
For now, it moves from extreme greed to moderate levels. The current position indicates that confidence remains, and a measure of concern is creeping into the markets. However, whether this contributes to stabilizing or depressing the market remains to be observed.
