Fear and Greed Index surges, crypto investor sentiment reverses for the first time in 3 months

The investment mentality in the cryptocurrency market is undergoing a significant shift. After a prolonged three-month period of conservative waiting, market participants are beginning to shift from a defensive stance to an offensive mindset. According to data released by market sentiment monitoring agency Alternative.me, the current sentiment in the crypto market has shifted from the previous “fear” to “greed,” marking the first clear bullish trend among investors since last fall.

Sentiment Index 61, the Era of Extreme Fear Officially Ends

The Fear and Greed Index recently rose to “61 points (out of 100),” officially breaking into the “greed zone.” This turning point came quite quickly — the day before, the index was still at a neutral level of “48 points”; prior to that, the index had been hovering at low levels for several weeks, repeatedly touching single digits, reflecting a market shrouded in extreme pessimism.

The Fear and Greed Index serves as an important reference tool for market sentiment, quantifying investors’ psychological states by integrating multiple on-chain and market data. A lower index indicates greater panic among market participants, while a higher index suggests rising greed. Although 61 points indicate an increased risk appetite, it is still far from the “extreme euphoria” often seen at the peak of a bull market (usually exceeding 80 points).

How the October Liquidation Wave Destroyed Market Confidence

The source of this pessimistic sentiment can be traced back to the dramatic volatility in the derivatives market on October 11 last year. Over $19 billion in derivative positions were forcibly liquidated in a single day, a black swan event that dealt a heavy blow to the entire market. As a result, major cryptocurrencies experienced collective declines, prompting many investors to cut losses or adopt a wait-and-see approach to avoid market risks.

In the following November and December, the Fear and Greed Index repeatedly dipped to very low levels, reflecting a deep state of pessimism. During this prolonged adjustment period, trading volume shrank, large amounts of capital withdrew from risk assets, and the entire market fell into a rare silence.

Bitcoin’s Rebound Sparks a Sentiment Turnaround

The shift in market sentiment has almost synchronized with Bitcoin’s recent price movements. Over the past week, Bitcoin has launched a counterattack, climbing from recent lows. According to the latest data, Bitcoin’s current trading price is around $90,000, recovering from lows seen seven days ago, successfully stabilizing market confidence.

As the leader in the crypto market, Bitcoin’s price movements often directly influence overall market sentiment. When BTC successfully recovers key support levels, more investors begin to reassess market opportunities, which explains why the Fear and Greed Index has surged so dramatically in a short period.

Can the Fear and Greed Index Maintain High Levels? The Test Has Just Begun

It is worth noting that the Fear and Greed Index is a sentiment indicator, not a trading signal. Historically, “extreme fear” often appears near market bottoms, presenting opportunities for strategic positioning; however, prolonged periods of “extreme greed” are usually associated with market tops.

The current level of 61 points lies between neutrality and overheating, indicating that there is still room for the market to rise, but risks are gradually accumulating. Global traders are closely watching whether this rebound can hold steady, especially whether Bitcoin can continue to rise to higher levels. The future trajectory of the Fear and Greed Index will be an important reference for judging the market’s next direction.