The Crypto Fear & Greed Index has flipped to a “greed” reading for the first time since October, signalling improving sentiment among crypto investors.
The index rose to 61 on Thursday after weeks spent in “fear” and “extreme fear” territory.
Investor sentiment collapsed on Oct. 11 following a $19 billion liquidation event that triggered heavy sell-offs across crypto markets.
The index had fallen to low double-digit readings throughout November and December as confidence remained weak.
Market sentiment has improved alongside a strong bitcoin rally over the past week.
Bitcoin climbed from about $89,800 to a two-month high near $97,700, according to CoinGecko data.
Analysts said the index had remained in extreme fear the last time bitcoin traded above $97,000 in mid-November.
The sentiment gauge is calculated using factors such as price volatility, trading momentum, search trends and social media activity.
Analysts at Santiment said bitcoin holders have been reducing positions, with more than 47,000 non-empty wallets disappearing in recent days.
"When non-empty wallets drop, it’s a sign that the crowd is dropping out, a good sign,"
Santiment said.
Santiment added that bitcoin supply on exchanges has fallen to a seven-month low, reducing the risk of a sudden sell-off.
At the time of reporting, Bitcoin price was $95,841.58.