Crypto market sentiment is down drastically until 2022. Mostly triggered by multiple companies collapsing, sending the market price into a downward spiral. This saw investor sentiment bounce between fear and extreme fear for the better part of H2 2022. However, there was a change in the tide as bitcoin led the market in another rally. Investor sentiment has now returned to pre-LUNA crash levels.
Crypto Investor Sentiment Turns Green
After sitting in fear territory until the end of 2022, the Fear & Greed Index has now moved into greed territory for the first time since April 2022. More interestingly, the index is now at levels around the time since the LUNA crash. This is when the market is still reeling from the 2021 rally before the collapse of Terra triggered the dreaded crypto season.
Now, as prices recover, so does investor sentiment. It currently stands at a score of 55 on the Fear & Greed Index, showing a significant improvement over the past few months. What’s more, the index showed steady gains over the past week.
Sentiment returns to March 2022 levels | Source: alternative.me
It is no longer struggling to break out of neutral territory, indicating that investors are now comfortable in accepting this as a bull rally, even if short. It also indicates higher buying sentiment as investors rush to take advantage of high prices and profit.
The index is now almost 100% up from where it closed in the last month of 2022 with a score of 28. This offers a complete 180 degree turn in how investors view the market at this time.
Crypto Ended The Month Better Than It Started
The crypto market is in a better place than it was at the start of January 2023. In less than 30 days, the market has added more than $200 billion to its market cap, bringing it back to levels not seen since before the FTX collapse.
This much-needed recovery is a step in the right direction and follows January to the point where the month ended better than it started. And as the buying sentiment around the leading cryptocurrencies such as Bitcoin and Ethereum has ballooned, the market can still have more growth to come.
The total market capitalization of crypto is currently below the $1 trillion mark but still shows the potential to rise again. Since the Fed is expected to not raise interest rates again, it is a prime growth environment for risk assets such as cryptocurrencies.
Total market cap adds over $200 billion in January | Source: Crypto Total Market Cap on TradingView.com
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