Crypto Markets Analysis: Fear Abates as Bitcoin Enters New Level of Support

Bitcoin BTC$90,538.84 and most other major cryptos have been soaring, but the upswing may only be part of the reason for investors to be optimistic.

Several key trading trends are pointing upward for the first time in months, suggesting the current rally will be more than just a temporary improvement. They reflect surging investor confidence that has also carried stock markets higher, albeit to a lesser degree than cryptocurrencies, and offer a welcome pause from months-long negativity that sent riskier assets dramatically lower throughout 2023.

"Whale" investors are not moving BTC onto exchanges as they often do during dramatic price surges, over-the-counter (OTC) desks have sharply increased their holdings and the Crypto Fear & Greed Index, a widely watched measure of investor sentiment, has entered neutral territory for the first time in 10 months.

Bitcoin was recently snugly perched above $21,000, which may become its new support threshold. Ether ETH$3,127.18 was holding steady above $1,500 after weeks of hobbling below $1,200. Equity markets have risen more moderately, with the tech-heavy Nasdaq and S&P 500, which has a hefty technology component, climbing 5.8% and 2.8%, respectively. How long these trends continue is uncertain of course. The ensuing weeks will be interesting.

Whale investor activity

Given their size, whales – investors holding at least 1,000 bitcoin – can significantly affect markets through their buying and selling.

Whales' recent lack of movement indicates they do not view the recent rally as a selling opportunity. This trend still bears monitoring but appears to be positive for long investors.

Increased over-the-counter bitcoin holdings.

As referenced in Tuesday’s First Mover Americas, the amount of BTC that investors are holding on OTC desks has risen 70% since Jan. 11.

The increased OTC holdings often signal increased institutional demand. Investors can also use OTC desks to source more capital than they can on a singular exchange, which also implies an uptick in investor demand.

The most sophisticated investors use OTC desks to acquire an asset quietly and more efficiently than they could in open markets..

The Fear & Greed Index turns 'neutral'

The Fear & Greed index ranges from 0 to 100. Lower numbers reflect negative sentiment (fear) and buying opportunities, while higher numbers indicate that markets are overheated and that investors might consider selling their bitcoin.

The current 51 reading is the first time in 10 months that the indicator has broken from the “Fear” range. The Fear & Greed Index stood below 10 just seven months ago and hovered in the mid 20s for much of the fall and early winter weeks.