Matrixport's Bitcoin Greed & Fear Index Indicates Upswing Ahead

The index has a solid track record of marking trend changes in the bitcoin market.

AccessTimeIconAug 11, 2023 at 6:14 a.m. UTC
Updated Aug 11, 2023 at 2:40 p.m. UTC

Crypto-services provider Matrixport's proprietary Bitcoin Greed & Fear Index, which has a solid track record of marking trend reversals, is signaling a bull revival in bitcoin (BTC)

The Greed & Fear Index measures investor sentiment. Readings above 90% signal greed or excess optimism, and readings below 10% represent extreme fear or pessimism. Such indicators are widely tracked because excess optimism or greed is often seen at market tops while fear is seen at market bottoms.

Data shows Matrixport's index recently turned higher from 30% to 60%, bottoming out after July's slide from above 90%.

"The index appears to have bottomed out as the daily signal (grey) is projecting upside pressure. After four weeks of consolidation, this indicator is tactically bullish and bitcoin prices could resume the uptrend," Markus Thielen, head of research and strategy at Matrixport, wrote in a note to clients on Thursday.

Matrixport's Bitcoin Greed & Fear Index
Matrixport's Bitcoin Greed & Fear Index (Matrixport)

Notice how tops and bottoms in the index and the index's 21-day simple moving average, or SMA, have historically coincided with bullish and bearish reversals in bitcoin's price. The 21-day SMA now shows signs of bottoming out, supporting the case for a renewed upside volatility in bitcoin.

Bitcoin has been listless for some time now, trading between $28,000 and $30,000 for over two weeks, amid volatility in traditional markets and expectations for interest-rate cuts by the Federal Reserve early next year.

According to some analysts, the U.S. Securities and Exchange Commission's pending decision on whether to approve a spot exchange-traded fund is a crucial catalyst for price volatility.

The regulator is facing a deadline on Sunday to approve or reject Ark Invest’s spot bitcoin ETF application, although some analysts expect the decision to come on Friday.

Edited by Parikshit Mishra.

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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.