Crypto Market Sentiment Returns To Pre-LUNA Crash Levels, What Does This Mean?

[ad_1]

Crypto market sentiment plummeted drastically through 2022. Most of them were triggered by the collapse of several companies, sending market prices into a downward spiral. This has seen investor sentiment swing between fear and extreme fear for most of the second half of 2022. However, there has been a trend reversal as bitcoin leads the market on another rally. Investor sentiment is now back to pre-LUNA crash levels.

Crypto Investor Sentiment Back in the Green

After sitting in fear territory until the end of 2022, the fear and greed index has now moved into greed territory for the first time since April 2022. More interestingly, the index is currently at levels roughly since the LUNA crash. This was back when the market was still reeling from the 2021 rally before the collapse of Terra triggered the dreaded crypto winter.

Now, as prices recover, so does investor sentiment. He currently sits at a score of 55 on the Fear and Greed Index, showing significant improvement over the past two months. Moreover, the index shows a steady increase 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 accepting this as a bullish rally, albeit short-lived. It also indicates heightened buying sentiment as investors rush to take advantage of high prices and earn some profits.

The index is now up almost 100% from its closing in the last month of 2022 with a score of 28. This offers a complete 180 degree turn in how investors view the market during this time.

Crypto ends the month better than it started

The crypto market is already in a much better place than it was at the start of January 2023. In less than 30 days, the market has since added over $200 billion to its market capitalization, bringing it down to levels not seen since before the FTX crash.

This much-needed recovery is a step in the right direction and it takes January to a point where it ended the month better than it started. And as the buying sentiment around major cryptocurrencies such as Bitcoin and Ethereum has exploded, the market could still have more growth to come.

The total crypto market capitalization now sits just below the $1 trillion point, but still shows upside potential. As the Fed is no longer expected to raise interest rates, this becomes a prime growth environment for risky assets such as cryptocurrencies.

Total Market Cap Adds Over $200 Billion in January | Source: Total Crypto Market Cap at TradingView.com

Follow Best Owie on Twitter for market news, updates, and the occasional funny tweet Featured Image by Masterworks, chart by TradingView.com

[ad_2]