Bitcoin: The Fear & Greed index returns to neutral territory, a truce before the next bull run?

The Bitcoin Fear & Greed Index has dropped back to 50 this Tuesday. After weeks of euphoria linked to ETFs, this return to calmness begs the question: just a pause before a new rally, or a misleading lull before a crash?

The Bitcoin Fear and Greed Index moves back to neutral territory

After weeks of euphoria related to the arrival of Bitcoin Spot ETFs, the Fear & Greed Index abruptly returned to 50 on January 23, signaling a neutral crypto market sentiment.

This index, which ranges from 0 to 100, aggregates several indicators such as volatility, transaction volume, and social media activity. Its goal: to determine whether fear or greed dominates among crypto investors.

Yet, the sudden shift from extreme greed (with an index between 65 and 76) to neutrality seems to indicate a pause in the incredible bullish rally of BTC in recent months. The queen of cryptos had risen from $16,000 to over $48,000 in one year, fueled by the enthusiasm around these indexed funds (ETFs) backed by Bitcoin.

However, the long-awaited approval of these ETFs by the SEC on January 10th did not spark the expected excitement. And after this fireworks show, a correction seemed inevitable. Bitcoin thus fell around $39,800 this Tuesday, putting an end to the excitement related to these new generation financial products.

An opportunity to buy worth catching?

For many seasoned traders, a Fear & Greed Index indicating investor fear is a signal for a buying opportunity to catch. On the other hand, when it enters a zone of extreme greed, utmost caution is advised.

The legendary investor Warren Buffett put it well: “It is wise to be greedy when others are fearful, and to be fearful when others are greedy“. In other words, even if this return to neutrality suggests a pause for Bitcoin, it could mainly mark an interesting entry point for long-term investors, convinced of its potential.

Time will tell if this rebalancing marked a temporary bottom before a possible resumption of the uptrend. In any case, for those who believe in Bitcoin in the long run, these corrections offer buying opportunities to catch, ephemeral windows to strengthen one’s positions.

Moreover, the overall context seems favorable. Indeed, Bitcoin adoption continues to accelerate, with giants like BlackRock making their entrance. And the next halving is approaching in April, mechanically reducing the supply of new bitcoins and generally supporting its price. All these signals suggest that this period could be just a pause before reaching new highs.