- Bitcoin Fear and Greed Index went from 18 to 45 within 4 days (April 9 to 13).
- Lowering of tariffs, corporate buying, upcoming rate cuts, and recovery in BTC derivative markets, act as key factors.
- Going ahead, we expect the Fear and Greed Index to reach 70 by the first week of May 2025.
Table of Contents
Stellar Recovery in Bitcoin Fear and Greed Index
The Bitcoin Fear and Greed Index made a stellar recovery from April 9 to April 13 starting at an extremely fair level of 18, then proceeding to a level of 25 (on April 11th) and finally today on April 13th, it is at a neutral zone of 45. These developments indicate that the mood of the markets is turning very bullish very fast.
This steller recovery has not only surprised the markets but has also lifted the sentiments in it. The markets that were very bearish 4 days ago, are now moderately bullish.
Before April 9th, we could see several market participants fearing a crash to $70k. However, these sentiments have turned green today and even crypto market experts have indicated that a recovery rally towards $100k could be imminent.
Since Bitcoin dominates 62% of the crypto market cap, we expect a recovery in Bitcoin could easily trigger a recovery in altcoins.
4 Factors Contributing to Market Recovery
Lowering of Tariffs
The US Government imposed very strict tariffs earlier last month on several key trading partners of the US like Europe, China, India, Japan, and many other nations citing that these countries have been unfair in taxing US goods and services.
The tariffs wreaked havoc in the markets leading to a crypto and stock market crash in March.
However, Trump later revised those tariffs to a net of 10% except for China where the USA has imposed a 125% tariff (except on a few goods like electronics). This relief brought a sigh to the markets leading to slight recoveries.
Corporate and Whale Accumulation
Several corporate Bitcoin buyers like Strategy and Crypto Whales have been accumulating Bitcoin since the crash in February. These whales (both corporate and crypto-native) have used the dip to accumulate decent reserves.
As a result, the demand for Bitcoin has gone up in the current markets.
Expectations of Rate Cuts
The US Fed’s comments on its last FOMC meeting indicated it would go dovish in April (i.e., start increasing money in the market) and based on this, there is a very strong possibility of at least a 0.25% rate cut. Fed’s hawkish policy (of raising interest rates) had sucked the liquidity out of the markets, causing cryptos and stocks to tumble.
Besides liquidity worries, the high interest rates have also slowed down home-ownership rates, cut spending, investments, and a lot more things within the US economy.
Improvement in Derivative Markets Data
Bitcoin derivatives markets have seen a surge in open interest data
Future Estimates
In the next few weeks, the markets might continue to rise further. Bitcoin is expected to cross $95k by the end of April and possibly $100k by the second week of May.
Therefore, expect the Bitcoin Fear and Greed Index to cross 70 by the end of the US FOMC meeting scheduled on May 6-7.
Understanding the Bitcoin Fear and Greed Index
The Bitcoin Fear and Greed Index is a multi-factorial crypto market sentiment analyzer that helps gage user sentiments about Bitcoin which is the most dominant cryptocurrency.
A score too low i.e., less than 25, denotes that the markets are in extreme fear and might sell at even slightly bad news while a score close to 100 shows that the markets are extremely bullish and extremely positive about upcoming rallies shortly. A score in the middle shows that the markets are cautiously optimistic (between 55 and 70) or cautiously pessimist (between 25 and 50).
We at Blockchain Lab use the score to align investment decisions. We typically use three components of research, i.e., fundamental (on-chain, market data, metrics), technical (chart patterns), and sentimental (fear and greed index), and an investment decision is only made when all 3 of them indicate the same thing (bearish or bullish).
Disclaimer: The website is made for informational purposes. Please connect with your financial advisor before investing.
