The crypto market has entered a more cautious phase, as the Fear and Greed Index, used to measure market sentiment, fell to 70 on Monday.
This decline is the lowest level since Donald Trump’s presidential victory last month.
The index, which ranges from 0 (extreme fear) to 100 (extreme greed), serves as a barometer for market sentiment, guiding investors on potential buying or selling opportunities.
While this decline still reflects greed-driven confidence, the decline also signals a growing awareness of risks as the market moves away from its recent euphoric highs.
Post-Trump high sentiment cools as Bitcoin slips
Following Trump’s election victory, the index rose to 94, reflecting extreme market greed as investors drove Bitcoin to December highs.
However, the subsequent decline to 70 indicates a more measured approach among traders.
At 94, the market is often seen as overvalued, with uncontrolled optimism driving asset prices higher.
Conversely, 70 suggests that caution is increasing, with investors reevaluating the possibility of a correction or bubble.
Bitcoin’s price trajectory reflects this change in sentiment.
Currently trading at around $95,488, the leading cryptocurrency is down more than 8% in the past week.
This slide outlines how the fear and greed indices are often related to Bitcoin’s performance – prices tend to rise when greed dominates but prices can quickly retreat when fear increases.
The latest decline also highlights a subtle recalibration among investors.
While greed remains a major theme, market participants are paying attention to warnings about overvaluation, suggesting a more balanced approach than the exuberance previously seen.
Bitcoin’s holiday volatility remains unpredictable
As the end of the year approaches, the question of Bitcoin’s holiday performance has come under scrutiny.
Historical trends provide little clarity, with the cryptocurrency displaying mixed behavior during the last festive period.
Some years have seen prices rise in January, while others have seen a decline.
One frequently cited factor is less liquidity during the holidays, which can increase price fluctuations.
Nevertheless, the absence of significant institutional participation during these periods has, at times, contributed to price stability.
This year, external influences such as macroeconomic trends, Trump’s imminent return to the White House, and post-2024 ETF approval could determine Bitcoin’s trajectory.
Bitcoin’s notorious volatility, a hallmark of its market dynamics, remains a central theme.
However, with the Fear and Greed Index now indicating a change in sentiment, the holiday season may offer a quiet phase until unexpected news reignites market activity.
Post Crypto Fear and Greed Index falls to lowest level since Trump’s election victory first appeared on Invez
