Crypto traders and investors often rely on sentiment indicators to assess overall market conditions and help decide whether it is a better time to buy, sell, or remain on the sidelines.
The Crypto Fear & Greed Index, which tracks investor sentiment across digital asset markets, has moved into “greed” territory for the first time since the massive $19 billion liquidation event in October that drove investors away from altcoins.
In its latest update on Thursday, the index climbed to a reading of 61, signalling a noticeable improvement in sentiment after several weeks dominated by “fear” and “extreme fear.” Just one day earlier, the index stood at 48, placing it in the neutral range.
Crypto market sentiment deteriorated sharply on Oct. 11 following the $19 billion wipeout across digital assets. In the weeks that followed, the index recorded some of its lowest readings on record, dropping into low double digits multiple times throughout November and December.
Sentiment gauges like the Crypto Fear & Greed Index are commonly used by market participants to evaluate psychological trends and better understand whether current conditions support accumulation, profit-taking, or caution.
Bitcoin rebound lifts market mood
The improvement in sentiment has coincided with a strong recovery in Bitcoin prices. Over the past seven days, Bitcoin has risen from around $89,800 to reach a two-month high near $97,700, according to data from CoinGecko.
The previous time Bitcoin traded above $97,000 was in mid-November, a period when the sentiment index remained deep in “extreme fear” as prices were falling sharply from record highs. This contrast highlights the shift in market psychology despite prices approaching similar levels.
The Crypto Fear & Greed Index is calculated using a range of inputs, including price volatility, trading volumes, market momentum, Google search trends, and overall sentiment across social media platforms.
Fewer Bitcoin holders seen as a positive signal
Meanwhile, analysts from on-chain analytics firm Santiment noted that the number of Bitcoin holders has declined over the past three days, with a net reduction of 47,244 wallets. According to the firm, this reflects retail investors stepping back due to fear, uncertainty, and impatience.
Santiment analysts described this trend as a potentially constructive sign, explaining that when the number of non-empty wallets falls, it often indicates weaker hands exiting the market. They also pointed out that Bitcoin balances on exchanges have dropped to a seven-month low of around 1.18 million coins, reducing the risk of sudden sell-offs.
Historically, lower Bitcoin reserves on exchanges are viewed as bullish, as they suggest investors are holding their assets in private wallets and are less inclined to sell quickly during short-term price moves.
