Over the past week, the crypto market has seen a downturn that has dragged down the prices of most digital assets in the space. However, despite this decline in prices, investors seem to not be reacting either negatively or positively as sentiment continues to maintain a rather consistent trend.
Crypto Fear & Greed Index Still In Neutral
With the market recovery that was recorded toward the end of January, the crypto market had finally ended its stretched-out negative trend. This recovery brought the Fear & Greed Index back into the neutral territory which indicated a great deal of improvement but not much bullishness at the same time.
Since then, the index has maintained this neutral territory after closing out the month of January at a neutral score of 52. Now, while a downturn such as this would have sent investor sentiment spiraling downwards once more, this has not been the case. Instead, crypto investors look to have maintained an indifferent stance toward the market.
Currently, the Fear & Greed Index is showing a score of 50, right in the middle of the index which reads between 0-100. This index takes into account various metrics such as market volatility, social media trends, momentum, surveys, etc, to arrive at a number that depicts how investors view the market.
Naturally, when the score falls between 1-45, it means investors are very wary of the market, leading to fewer investments. While a score between 55-100 shows that the market is very greedy, leading to more investments that happen during bull markets.
With sentiment still staying at the neutral level, it is no surprise that there have been no drastic movements in the market lately. Bitcoin is still consolidating around $21,000-$22,000, and most of the crypto market has fallen in line with this.
What Happens When Sentiment Changes?
A change in investor sentiment could tell where the prices of crypto assets such as Bitcoin and Ethereum are headed next. If the sentiment were to move back into the fear territory, then further dips and crashes would be expected in the market.
However, if there were to be a movement into the greed territory, it would trigger buying pressure in the market, causing the prices of the digital assets to surge. If this happens, it would mark a continuation of the bull rally that was started in January.
For now, the total crypto market cap has fallen below $1 trillion once more, spurred on by the market decline. It is currently sitting at $962 billion after shedding almost $100 billion from its 2023 high of $1.057 trillion.
Total market cap at $962 billion | Source: Crypto Total Market Cap on TradingView.com
