For the first time since April 2022, the Bitcoin Fear & Greed Index (FGI) has moved from the ‘fear’ zone to ‘neutral’.
Over the weekend, Bitcoin hit an index score of 52 as Bitcoin broke above $21,000.
As of press time, the score has moved back slightly to the lower end of the “fear” scale with a rating of 45. The index started the year in the “extreme fear” zone, indicating that bearish sentiment had control of the market in the beginning of January.
However, as Bitcoin rallied from the $15,600 to $17,200 range that it held through November and December, the FGI moved away from extreme fear.
Bitcoin went into free fall after the FTX collapse. However, it appears to have recovered to pre-FTX crash levels over the past week. The top cryptocurrency by market cap was range bound for about 63 days before breaking resistance to break above $20,000 again.
Also, while the IGF may have moved away from ‘fear’, other global metrics have not shown a similar uptrend. For example, Google search traffic for the term ‘Bitcoin’ is still at its lowest level since December 2020.
Interest by region shows El Salvador as the most interested in Bitcoin by some margin, followed by Nigeria before a large gap against European countries such as the Netherlands, Switzerland and Austria.
Bitcoin is legal tender in El Salvador, while Nigeria uses BTC for peer-to-peer payments.
Nigeria recently recognized cryptocurrencies as an asset class along with its CBDC, e-Naira. However, Paxful CEO Ray Youssef attributed Bitcoin’s rise in popularity to Nigerian youth culture by stating:
“Nigeria is different, young people cared about it, they were like bring Bitcoin, fuck everything else, let’s do it.”
Aside from these outlier nations, interest in Bitcoin has certainly waned during the bear market, and the recent rally has not led to a sizable increase in Bitcoin searches globally.
Additionally, a sentiment analysis review of popular Bitcoin-related videos, news, and blogs showed a spike in positive sentiment on Jan. 15. However, there has been no apparent increase in positive or negative views in the last 30 days.
Looking at the historical data from FGI, it is clear that Bitcoin has broken the downtrend line that began in November 2021. However, further breakouts were supported by increased interest in Bitcoin, which is not evident at the time of the news. publication.
Potential negative catalysts continue to be at the forefront of investors’ minds as Digital Currency Group has failed to publicly insure its business. As a result, the risk of further market pain remains high, with many pointing to the recent price action as indicative of a bull trap.
However, Alistair Milne, chief investment officer at Altana Digital Currency, shared a popular chart which represents the typical mindset of investors at each stage of a price cycle. In the image below, the final stage of a bear market is described as “disbelief.”
After the ‘disbelief’ phase, the market returns to bullish territory.
Such images are far from 100% accurate as there is no crystal ball to predict the price of Bitcoin. However, with inflation plummeting and just over a year until Bitcoin’s next halving, there is finally some reason to hold out hope for a faster-than-expected return to the bull cycle.
