The Crypto Fear and Greed Index, measuring the crypto market’s emotional pulse, has dropped to its lowest level since Donald Trump’s presidential victory last month.
On Monday, the index reached 70, matching its level just before Trump’s decisive victory. He had captured several swing states, while the Republican Party also gained control of the Senate.
This index scales from 0, indicating extreme fear, to 100, signaling extreme greed. It helps traders and investors assess whether the market is driven by fear or greed, guiding their buying and selling decisions.
Bitcoin Sentiment Cools as Fear and Greed Index Drops from Post-Trump Highs
In the days following Trump’s election, the index soared to as much as 94, indicating peak market greed and potential overvaluation. This high came even before Bitcoin recorded an all-time high on. Dec. 17.
Now, the index’s drop to 70 still reflects a greed-driven market, with investors remaining overly confident but less intensely so. The shift also shows a slight rise in risk awareness among some investors. At 90, greed often fuels unchecked pursuit of gains, while at 70, investors start paying attention to warnings about potential corrections or bubbles.
Currently, Bitcoin is trading around $95,488, and is down over 8% in the last week. The asset’s price often mirrors investor sentiment, rising quickly when greed drives expectations of gains and falling sharply as fear prompts sell-offs.
No Clear Pattern for Bitcoin Over Holidays?
James Toledano, COO at Unity Wallet, offered advice on Bitcoin’s holiday-season behavior. He drew a parallel between Bitcoin’s volatility and the constant wetness of water, stating that just as water is always wet, Bitcoin is always volatile.
“It’s behavior is always mixed and there is zero discernible pattern at the end of the year and going into the next,” he said. “Sometimes the price rises in the new year and at other times it falls. So, historically, we can say that Bitcoin exhibits typically mixed behavior over Christmas and New Year.”
He clarified that although lower liquidity might amplify volatility, a lack of significant institutional involvement could conversely stabilize prices. However, exceptions occur in years when macroeconomic news or market catalysts trigger abrupt changes.
“This year, much depends on investor sentiment following 2024’s ETF approval and the Trump-factor as well as other macro trends. A relatively quiet period is possible unless unexpected news reignites volatility. But given that on Jan 20th, pro-Bitcoin Trump will be back in the White House, I think we can expect a lot of price movement again very soon,” he added.
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