The main cryptocurrency sentiment analysis tool, the Bitcoin Fear and Greed Index, entered neutral territory at the end of last week after months of fear.
On January 15, the index reached a neutral level of 52, its highest level since April 5, 2022. The move followed a 24% rise in the value of Bitcoin (BTC) over the past seven days.
The market sentiment tracker bottomed out on June 9, 2022. Since then, it has been hovering between 20 and 30 in the “extreme fear” category. Also, last year, the Fear and Greed Index had its longest period of intense fear.
The indicator uses “movements and sentiments from various sources,” including current volatility, market momentum and volume, social media data, and Google trends.
The strong momentum created a significant move in technical indicators such as the RSI (Relative Strength Index), which reached a four-year high on the daily timeframes.
As a result, BTC experienced the second longest winning streak in history, with a 12-day run this month. The value of the asset is up 28% since the start of this year, erasing all losses in the fall that followed the FTX crash in early November 2022.
“The recent move has been described by many analysts as a bull trap, but the strong weekly close has led some to believe the momentum will continue,” said trader Peter Brandt.
Analyst Tony M notes that the digital asset could be on its way to the 200-week exponential moving average (EMA) at $24,490.
“If it overcomes that level, Bitcoin’s path is open towards $27k and it could produce a January close near $30k which would be very positive for the bulls,” he said.