BlocksInform
The measure showing the general feeling of the community towards bitcoin – the index of fear and greed – entered the area of ‘greed' for the first time since March 30, 2022.
This could be the result of rising primary cryptocurrency prices in the first month of the year and an overall market-wide recovery.
Back to ‘Greed’
Contrary to the economic crisis that has spread across the globe, bitcoin has started off the year on the right foot. It is currently trading at approximately $23,000 (as per Coingecko), up 40% from the last day of 2022.
The tip of the iceberg of fear and greed, serves as a proxy for investors' momentary feelings about digital assets, was trapped in the territory of "fear" or "extreme fear" for several months due to the protracted bear market and many bankruptcies and scandals in the sector.
However, the asset’s spike seems to have changed the trend, and today (January 27), the metric pointed at 55 – “Greed.” The index was last measured about 10 months ago.
It should be noted that increased confidence among crypto investors should not be directly seen as a catalyst for a renewed skyrocketing recovery. In fact, measure being in a state of "fear" or "extreme fear" could indicate a good opportunity to buy, whereas overly greedy investors might mean that the market is to be corrected.
Is it possible for the BTC to support the rally?
The impressive asset performance in the early weeks of 2023 has led some to think that a new bull market may be moving closer. Facing the inflation crisis could potentially help another Bitcoin rally in the coming months.
Almost all of the U.S. Consumer Price Index announcements have increased volatility for Canada and, typically, surges in inflation have caused its valuation to fall. Evidence shows that efforts to address issues have begun to yield results. The inflation rate in the world’s biggest economy was 9.1% in June (the highest in 40 years), while December’s figures clocked in at 6.5%.
Another factor which could have an impact on the price yield of the BTC is the meetings of the Federal Committee on the Free Market (fomc), where the central bank announced seven consecutive increases in interest rates to try to lower runaway inflation.
The current benchmark is 4.5% (highest in 15 years), with further increases expected in the months ahead. Here is a list of the CPI calendar and all the FOMC meetings until the end of 2023.
Anthony Scaramucci – the Founder of SkyBridge Capital – recently opined that the Fed will stop raising interest rates when inflation cools off at around 4-5%, which will supposedly stimulate a bull run for digital currencies.
