The crypto market has continuously changed, and sentiments have kept on fluctuating in the past six years impacting the perspectives of investors as well as shaping market trends. A recent report from CoinGecko reveals that from February 2018 until March 2024, the Crypto Fear & Greed Index held by Alternative.me provides us with accurate information about these changes in attitude.
During this time frame, fear had been prevailing sentiment dominating for 54.7% while greed followed closely at 32.0% and neutrality was modestly at 13.3%. The average Fear and Greed Index of 45 demonstrates a market of lingering fear; highlighting how short the highs of optimism are compared to the long bouts of panic and negativity.
Notably, from November 2023 to February 2024, there have been four consecutive months in which the market sentiment did not show any “fear” days. This has given rise to speculations about sustained bullish momentum before the Bitcoin halving in April. This record reminds of another one made three years ago when Bitcoin went above $40k for the first time.
If we look back to the Crypto Winter of 2018 to 2019, the market stayed in fear for a long time, having had fear in 288 days of the year 2018 and 216 days of the year 2019. The fall was characterized by the bursting of the ICO bubble that resulted in a collapse of crypto market capitalization from its peak at $0.85 trillion to $0.13 trillion by the end of the year. In spite of a mid-year recovery in 2019, however, this fear persisted but with a slight improvement from previous years.
Navigating Crypto Market Cycles
In contrast, there was a more balanced sentiment mix during the year 2020, which consisted of fear at around 46.2% as well as greed at about 39.1%, thus showing that it was a consolidating and recovering market. Contrarily, the following year’s unprecedented greed showed that out of all other emotions, it lasted for approximately 199 days while Bitcoin reached new record heights and total crypto market capitalization surged above $2.31 trillion.
The year 2022 was different as almost all the days were dominated by fear resulting in 94.0% of the total number of days. The market had negative sentiments most of the time, with quarterly increments that resulted in key milestones like NFTs reaching the highest levels. In the year following it, 2023, there was a stabilizing sentiment with more neutrality and greed at the expense of fear. This trend suggested a consolidating market, with milder sentiments recorded on the Fear and Greed Index.
Nonetheless, cryptocurrency market sentiment has seen significant ups and downs over the last six years pointing to its volatile nature as a digital asset space. But moments of greed have also lifted spirits and given rise to bullish rallies within periods of fear which serves to illustrate that investor sentiment in crypto markets is cyclic.