Crypto Market Sees Rally, Boosted by Rising Fear and Greed Index and Open Interest

The cryptocurrency market maintains its upward momentum, with Bitcoin and many altcoins showing positive gains as significant indicators improve.

Key Takeaways

The cryptocurrency market is experiencing a rally, with Bitcoin and altcoins in the positive.
The Fear and Greed Index has moved from extreme fear to a reading of 42, its highest since September.
Futures open interest has increased over 1.4% in the last 24 hours, indicating a bullish sentiment among investors.

Crypto market rallies as Fear and Greed Index, open interest rises - 1

Bitcoin price surged to $92,500, reflecting an increase of nearly 15% from its November low. Meanwhile, Ethereum has held strong above the crucial $3,000 resistance level, contributing to a total market capitalization of over $3.25 billion across all tokens.

Crypto Market Rally Fueled by Fear and Greed Index Shift

The ongoing rally in cryptocurrency prices aligns with a notable shift in the Fear and Greed Index, which has transitioned from the extreme greed zone. According to data from CoinMarketCap, the index has risen from a low of 10 in November to a current reading of 42, marking its highest point since September.

Crypto Fear and Greed Index | Source: CMC

The Crypto Fear and Greed Index gauges market sentiment by analyzing various metrics, including the price momentum of Bitcoin and altcoins, market volatility, and the activities within the derivatives market, as well as Bitcoin's relative market value. This index is inspired by a similar tool developed by CNN Money, which assesses factors like stock price strength and market volatility. It has observed a significant jump from an extreme fear level of 5 in November to 45 today.

Rise in Futures Open Interest

Accompanying the crypto market rally, there has also been a noticeable increase in futures open interest. Data from Coinglass shows that open interest in futures rose by 1.433% over the past 24 hours, surpassing $140 billion—its highest level in over a month.

Crypto futures open interest | Source: CoinGlass

This increase in open interest is a positive indicator for the cryptocurrency market, suggesting that investors are utilizing leverage in their trading activities. More leverage typically leads to potential price increases. Notably, open interest has been on a downward trend for several months, particularly following events on October 10, when over 1.6 million traders faced liquidation, resulting in losses exceeding $20 billion after President Donald Trump hinted at tariffs on Chinese gains.

With the current upward trends in sentiment and trading activity, the crypto market appears poised for continued interest and engagement from investors.