The Crypto Fear & Greed Index, a widely used gauge of market sentiment towards Bitcoin and cryptocurrencies, has experienced a notable decline, retreating to levels last seen in October 2024. As of December 30, the index registered a score of 65, indicating a sentiment of greed but reflecting a reduction from earlier highs, making it the lowest score since mid-October.
Currently, Bitcoin is trading around $93,000, having dropped 13.7% over the past twelve days. This downturn has raised concerns among traders about a potential major sell-off, prompting a shift towards stablecoins as investors seek to mitigate risk. The index had maintained a strong position above 70 throughout November and December, buoyed by the pro-crypto political climate following the recent U.S. elections and previously peaking at a remarkable 94 on November 22.
The index is determined by various factors that influence trader and investor behavior, including google search trends, social media activity, market volatility, momentum, and dominance.
On December 29, analysis pointed to speculation regarding a potential price surge leading up to the upcoming presidential inauguration, followed by a possible significant correction. Some analysts suggest that heightened volatility could be on the horizon. Veteran traders have noted patterns indicating the current Bitcoin movement might follow a sequence characterized by an initial increase, followed by a decline and subsequent recovery, then another drop before potentially rebounding again.
Furthermore, analysis from a blockchain researcher pointed out that Bitcoin remains the top-performing asset over the last decade, significantly outperforming traditional investment vehicles. In 2024, Bitcoin achieved impressive returns of 129%, while gold and the S&P 500 recorded much lower gains. This performance continues to underline Bitcoin ’s position as a dominant player in the financial landscape, despite current market fluctuations.
