Greed returns to the cryptocurrency market after prolonged weeks of distrust

After months of extreme caution among investors, sentiment in the crypto ecosystem has shifted toward greed for the first time since October, marking a significant turn in market psychology. The Crypto Fear and Greed Index, a widely followed metric to gauge traders’ emotional health, reached 61 points on Thursday according to data from Alternative.me, leaving behind a prolonged period of pessimism.

The greed indicator hits its highest level since fall

The Fear and Greed Index functions as a thermometer of risk appetite in cryptocurrencies. A reading of 61 represents a clear improvement from the low values recorded in November and December, when investors experienced moments of extreme aversion. Just 24 hours ago, the same indicator was at 48, a neutral point, demonstrating how quickly market dynamics have changed.

This jump toward greed is not without historical precedent. On October 11, approximately USD $19 billion in positions were liquidated in a single blow, triggering cascades of sales in altcoins and paralyzing fearful traders. The aftermath of that event extended for weeks, keeping the index in double-digit lows throughout the holiday season and the early days of the new year.

Bitcoin drives the market’s emotional recovery

The recovery in sentiment is directly linked to the performance of the sector’s most important asset. In recent days, Bitcoin has shown a notable rally: it climbed from around USD $89,800 to reach two-month highs near USD $97,704. Although the current situation shows some volatility—with Bitcoin trading around USD $87,900 according to CoinGecko data—the recent upward movement has reestablished a confidence base that seemed lost just a few weeks ago.

This rebound means more than just numbers on a screen. For traders, these movements indicate that buyers are re-entering the market and that selling pressure is easing. Bitcoin’s ability to recover levels not seen since before the October drop is psychologically significant in a market where sentiment drives important decisions.

What does a 61 reading on the greed scale mean?

Unlike the “extreme fear” periods that characterized previous months, a reading of 61 indicates that investors are willing to take on more risk, but it does not reach the maximum euphoria levels typically associated with market peaks. Experienced traders use these metrics less as direct buy or sell signals and more as context to understand the prevailing emotional state.

History shows that extreme fear has often coincided with buying opportunities—market bottoms where prices are depressed—while sustained periods of extreme greed tend to signal significant corrections. With the current reading, the market is in an intermediate territory: neither panicked nor uncontrollably exuberant.

The dollar factor: why doesn’t Bitcoin rise with USD weakness?

A particularly interesting aspect of the current analysis is the atypical disconnect between the performance of the US dollar and Bitcoin. Traditionally, when the US currency weakens, alternative assets like cryptocurrencies tend to benefit. However, JPMorgan strategists have noted that the current dollar decline is more due to short-term dynamics—specific flows and transitional sentiments—rather than structural changes in economic growth or monetary policy.

This distinction matters. If dollar weakness were perceived as permanent, Bitcoin would act as a reliable hedge. But since markets interpret it as temporary, Bitcoin behaves more like a risk asset sensitive to liquidity rather than a safe haven. In this scenario, gold and emerging markets gain diversification benefits in dollars, leaving Bitcoin in a more volatile role.

Greed should be approached with caution

The shift in sentiment toward greed naturally generates enthusiasm, but cautious traders keep their guard up. The rapid emotional turn—from fear to greed in just days—underscores the psychological volatility of the crypto market. The real question is not whether sentiment has changed, but whether prices can sustain these new levels when market attention shifts to other topics or global events.

What happens in the coming weeks will be revealing. If Bitcoin manages to consolidate above the recent two-month highs, greed could turn into more solid confidence. If it reverses, the same indicator could fall just as quickly as it rose, reminding investors that in cryptocurrencies, sentiment is often as volatile as the price itself.