- Bitcoin price rally has stalled in the past few days as it hovers near its YTD highs.
- The fear and greed index has drifted to the greed zone of 65 while gold price has retested $2,000.
- The VIX index has crashed by over 50% to the lowest point in years.
Bitcoin price has drifted downwards in the past few days. BTC has dropped for three straight days and is trading at $37,115, which is a few points below the year-to-date high of $38,442. Despite the rebound, Bitcoin has risen by over 126% in the past 12 months, outperforming stocks and commodities.
Bitcoin’s price action has coincided with the spread of a risk-on sentiment in the financial market. For example, the fear and greed index, which is one of the best gauges of sentiment, has risen to the greed area of 65.
A look at its sub-indices shows that safe haven demand, put and call options, and market momentum have moved to the extreme greed area. Similarly, the stock price strength and stock price breadth have moved to the greed area. The only two struggling sub-indices are the junk bond demand and market volatility, which are in the fear and neutral points.
In most cases, Bitcoin and other risky assets do well when investors are greedy. This explains why Bitcoin is still hovering near its highest point since April 2022.
The other important price action is on gold, whose price has surged to over $2,000 for the first time in months. Gold has jumped by over 25% from its lowest point in 2022 and is about to move to its all-time high.
The US dollar index (DXY) and the CBOE Volatility Index (VIX) have also moved downwards. VIX, which is a well-known fear gauge has slumped to the lowest point since 2020. It has crashed by over 50% from its highest point since 2020. In most cases, risky assets like stocks and crypto do well when the VIX is falling.
Bitcoin price has lost momentum as investors react to last week’s Binance and Changpeng Zhao settlement with the SEC. In the deal, the company agreed to pay a fine of over $4 billion. CZ stepped down as the CEO and agreed to pay a $50 million fine. He has also paid a multi-million dollar bail to avoid jail for now.
The volume of cryptocurrencies traded in centralized exchanges dropped after the settlement but is showing signs of coming back.
Looking ahead, the weekly chart shows that Bitcoin price has been in an uptrend recently. It has moved above the 50% Fibonacci Retracement point. It also remains above the 50-week and 25-week moving averages. Therefore, the outlook for Bitcoin is still bullish, with the next point to watch being at the 38.2% retracement at $42,900.
