After 18 days at the bottom of a widely used crypto market sentiment index, the market appears to be showing early signs of improving sentiment.
The Crypto Fear & Greed Index, which measures overall crypto market sentiment, posted a “Fear” score of 28 on Saturday, the first time since Nov. 10 that it hasn’t posted an “Extreme Fear” score.
The prolonged stretch near the index’s most bearish level for the majority of November, historically Bitcoin’s (BTC) best-performing month on average, did not go unnoticed by the broader crypto community.
“Extreme Fear” readings have typically marked bottoms, says trader
On Nov. 15, crypto analyst Matthew Hyland pointed out that the index was at the “most extreme fear level” of the entire cycle. “A path like this for BTC Dominance would now be max pain,” Hyland said at the time. Just days later, on Nov. 23, crypto analyst Crypto Seth said, “Extreme Fear is an understatement.”
However, crypto trader Nicola Duke said that every time extreme fear has been on the index, it has marked a “local bottom” for Bitcoin.
Other indicators have since suggested that sentiment may be recovering. Crypto sentiment platform Santiment said on Wednesday that Bitcoin was showing “generally bullish sentiment” after Bitcoin climbed back to nearly $92,000, citing its social media bullish-to-bearish sentiment indicator.
Crypto market still appears to be in risk-off mode
Santiment said that market discussions surrounding Bitcoin on social media have focused on price volatility, and institutional activity, including ETFs and treasury purchases.
Related: BTC price pauses at $92K: Can Bitcoin avoid another crash?
However, crypto market participants still appear to be hesitant and in risk-off mode, according to CoinMarketCap’s Altcoin Season Index, which currently sits firmly in “Bitcoin Season” with a score of 22 out of 100 — a metric that oscillates between Altcoin and Bitcoin season readings.
On Friday, Bitwise Europe's head of research, André Dragosch, said Bitcoin’s price has been misaligned due to a misreading of the broader macroeconomic outlook, particularly growing expectations of an upcoming recession.
“The last time I saw such an asymmetric risk-reward was during COVID,” Dragosch said.
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