Cryptocurrency Market Hits New Highs What Happens to the Fear and Greed Index?

Author: Lim Yu Qian, Coingecko; Compiler: Deng Tong, Golden Finance

What is the sentiment of the cryptocurrency market over time?

Over the past six years from 2018 to 2024, cryptocurrency market sentiment has been negative 54.7% of the time was fearful 32.0% of the time, greedy 32.0% of the time, and neutral the remaining 13.3% of the time. During this period, the average score of the fear and greed index was 45, which means that fear sentiment is close to neutral. This suggests that cycles of optimism in cryptocurrencies are shorter than cycles of panic and negativity, or that expectations of only rising markets are more short-lived compared to bearish expectations. It's also worth noting that the Fear & Greed Index has tracked market sentiment in more bearish years than bullish years.

Most recently, from November 2023 to February 2024, the Cryptocurrency Fear and Greed Index went four consecutive months without any “fear” sentiment for the first time. It remains to be seen whether the cryptocurrency market will continue to experience bullish sentiment. Until the Bitcoin halving in April.

Fear and Greed Index This record was previously approached three years ago between November 2020 and February 2021, when Bitcoin first rose above $40,000. At the time, several days of greed were punctuated by a single day of fear as Bitcoin pulled back slightly before hitting new highs.

Cryptocurrency Winter 2018-2019

In 2018-2019 During the cryptocurrency bear market, the Fear and Greed Index recorded the second and third highest number of days in the “fear” sentiment range, respectively.

In 2018, 288 days (86.2%) of the 334 cryptocurrency markets tracked experienced overwhelming fear, with extreme fear (42.2%) and almost the same number of days as just fear (44.0%). The total cryptocurrency market capitalization reached a new peak of $0.85 trillion on January 7 before collapsing as the ICO bubble burst, falling back to $0.13 trillion by the end of the year.

The cryptocurrency bear market continued into 2019, with concerns about the index expressed on 216 out of 365 days (59.2%). The Fear & Greed Index recorded its largest overnight drop of 45 points this year, with the index falling from 61 points (greed) on July 14 to 16 points (extreme fear) the next day. Nonetheless, cryptocurrency market sentiment was buoyed by a slight mid-year recovery and recorded 121 days of greed (33.2%) in 2019, which was an improvement over the previous year.

Fear and Greed in the Complete Cryptocurrency Market Cycle

The sentiment mix was more balanced in 2020, with fear accounting for 46.2% and greed at 39.1%, reflecting market consolidation and steady recovery. Especially in the second half of the year, during the DeFi summer, the cryptocurrency market experienced 80 days (21.9% of the year) of extreme greed and 0 days of extreme fear.

In the 2021 bull run, the cryptocurrency market experienced its greediest of all years tracked to date One year, greed occurs 199 out of 365 days (54.5%). The Fear and Greed Index also recorded an overnight high of 40 points, rising from 38 points (fear) on March 1 to 78 points (extreme greed) the next day. This year, the total cryptocurrency market capitalization has risen from $0.78 trillion to $2.31 trillion, while Bitcoin has broken new highs, topping $69,000.

The cryptocurrency market was particularly booming in the first quarter of 2021 and experienced greed 96.7% of the time. However, sentiment became more mixed in subsequent quarters, likely due to a pullback due to volatile market conditions.

Cryptocurrency sentiment in 2022 is in stark contrast, as the market has been in fear almost all year, i.e. 343 out of 365 days (94.0%). The number of days with extreme fear was 207, exceeding the 136 days in which fear alone was recorded. Although NFTs climbed to new highs in the form of native cryptocurrencies, the cryptocurrency market only experienced 3 days of greed and no extreme greed.

Even in the first quarter when cryptocurrency ads featured prominently in the US Super Bowl, the cryptocurrency market has been in fear 83.3% of the time. This is increasing every quarter: Fear accounted for 93.4% in Q2 as Terra Luna collapsed, then climbed to 98.9% in Q3 as contagions increased and overall market conditions worsened, ending in In Q4, fear peaked at 100.0% as FTX crashed.

Despite the persistence of the crypto bear market in 2023, market sentiment appears to be stabilizing, with 137 days (37.5%) being neutral, 165 days (45.2%) greedy, and 63 days (17.3%) Appearance fears are significantly reduced. It is worth noting that there are only 3 days of extreme fear and no days of extreme greed in the first quarter of 2023. This suggests that consolidation in the cryptocurrency market has led to milder sentiment recorded by the Fear and Greed Index.

Cryptocurrency Fear and Greed Index (by Year)

As of March 5, 2024 Percentage of days per year that the cryptocurrency market experienced fear, neutrality, and greed sentiments from 2018 to 2024: