Bitcoin Fear & Greed Index Nears Neutral as Price Recovers to $85,000

Data indicates that the Bitcoin market sentiment has approached neutral territory as the cryptocurrency’s price has recovered to $85,000. The “Fear & Greed Index” is an indicator that reflects the average sentiment among investors in the Bitcoin and wider cryptocurrency markets. This index is determined by analyzing data on five factors: volatility, market cap dominance, social media sentiment, and Google Trends.

The index uses a numeric scale from zero to hundred to represent the estimated sentiment. Values above 53 indicate a sentiment of greed, while those below 47 indicate fear. The territory between these cutoffs represents a net-neutral mentality. Currently, the Bitcoin Fear & Greed Index stands at 44, suggesting that investors as a whole share a sentiment of fear. However, this sentiment is only slightly dominant, as the metric is just three units away from the neutral zone.

Just a day prior, the indicator held a value of 34, firmly placing it in the fear region. The chart showing the index’s value over the past year reveals that the Bitcoin Fear & Greed Index was around the neutral zone in the final week of March. However, a price plunge during the last couple of days of the month led to a rapid deterioration of sentiment. At its lowest, the indicator touched the 26 mark, which is deep into the fear region and on the entryway to a special zone called the extreme fear (25 and under).

Historically, Bitcoin and other digital assets have tended to move in the direction that the crowd least expects. The probability of such a contrary move rises as investor sentiment becomes stronger, so extreme fear is where bottoms are likely to take place. During the recent plunge, the index didn’t enter into this zone, but it did come close, which may be why BTC’s price was able to reach a local bottom. Since the low, the asset has made some recovery and has now broken past $85,000.

With investor sentiment no longer being strong in any direction following this recovery, the cryptocurrency might be roughly equally probable to move in either direction. At the time of writing, Bitcoin is trading at around $85,000, down almost 4% in the last seven days. The price of the coin appears to have been climbing over the past two days, indicating a potential stabilization in the market.