After 18 days at the underside of a widely used crypto market sentiment index, the market appears to be showing the primary signs of improving sentiment.
The Crypto Fear & Greed Index, which measures overall sentiment within the crypto market, reported a “Fear” reading of 28 on Saturday, the primary time since November 10 that it didn’t record an “Extreme Fear” reading.
The index's continued approach to essentially the most bearish level throughout most of November, historically Bitcoin's (BTC) best-performing month on average, didn’t go unnoticed by the broader crypto community.
“Extreme Fear” levels typically show bottoms, the trader says
On November 15, crypto analyst Matthew Hyland identified that the index was on the “most extreme fear level” of your entire cycle. “Such a path for BTC dominance now can be extremely painful,” Hyland said on the time. Just days later, on November 23, crypto analyst Crypto Seth said, “Extreme fear is an understatement.”
However, crypto trader Nicola Duke said that each time there was extreme fear on the index, it has marked a “local bottom” for Bitcoin.
The Crypto Fear & Greed Index recorded a “fear” rating of 28 on Saturday. Source: alternative.me
Other indicators have since suggested that sentiment may very well be recovering. Crypto sentiment platform Santiment said on Wednesday that Bitcoin is showing “generally bullish sentiment” after Bitcoin rallied back to just about $92,000, citing its bullish to bearish sentiment indicator on social media.
The crypto market still appears to be in risk aversion mode
Santiment said market discussions surrounding Bitcoin on social media have focused on price volatility and institutional activity, including ETFs and government bond purchases.
However, based on CoinMarketCap's Altcoin Seasonal Index, cryptocurrency market participants still seem hesitant and risk-averse. With a rating of twenty-two out of 100, it’s currently firmly in “Bitcoin season” – a metric that fluctuates between altcoin and Bitcoin season values.
On Friday, Bitwise Europe head of research André Dragosch said Bitcoin's price was misaligned as a consequence of a misinterpretation of the broader macroeconomic outlook, particularly growing expectations of an impending recession.
“The last time I saw such an asymmetric risk-reward ratio was during COVID,” Dragosch said.
