A metric showing the community's general sentiment towards bitcoin, the fear and greed index, is reported to have entered the "greed" zone for the first time since March 30, 2022.
Analysts believe this may be due to the rise in the price of major cryptocurrencies in the first month of the year and the overall revival of the overall market.
Contrary to the economic crisis that has spread around the world, bitcoin started the year on a positive note. It is currently trading at around $23,000, which is a 40% increase from the last day of 2022.
The BTC Fear and Greed Index, which serves as an indicator of momentary investor sentiment towards cryptocurrencies has been stuck in “Fear” or “Excessive Fear” territory for several months due to a prolonged downturn in the market and many crypto industries starting to go bankrupt.
However, the surge in assets seems to have reversed the trend, and today, the metric shows 55 – “Greedy”. The last time the Index reached that level was about ten months ago.
It should be noted that the increase in confidence among crypto investors cannot directly be considered as a catalyst for bull momentum. That being said, metrics that are in a state of "Fearful" or "Extremely Fearful" can indicate a good buying opportunity, while overly greedy investors can mean the market needs to make a correction.
The asset's impressive performance in the first few weeks of 2023 has led some to believe that a bullish market may be on the way. Facing an inflationary crisis could potentially help bitcoin rise over the coming months.
Almost every US CPI data announcement has brought volatility for BTC. The data shows that US efforts to solve the problem are starting to bear fruit. The inflation rate in the world's largest economy was 9.1% in June (the highest in 40 years), while the December figure stood at 6.5%.
Another factor that could affect BTC's price performance is the (FOMC) meeting, where the central bank has announced seven consecutive interest rate hikes in an effort to lower soaring inflation.
Anthony Scaramucci – Founder of SkyBridge Capital – recently opined that the Fed will stop raising interest rates when inflation settles to around 4-5%, which will supposedly spur a rise in prices for cryptocurrencies.
