The crypto market sentiment dropped drastically through 2022. Most of it was triggered by multiple firms collapsing, sending market prices into a downward spiral. This saw investor sentiment bouncing between fear and extreme fear for the better part of H2 2022. However, there has been a turn in the tide as bitcoin leads the market on another rally. Investor sentiment has now returned to pre-LUNA crash levels.

Crypto Investor Sentiment Makes Its Way Back Into Green

After sitting in the fear territory right through the end of 2022, the Fear & Greed Index has now moved into the greed territory for the first since April 2022. More interestingly, the index is currently sitting at levels around the time since the LUNA crash. This was when the market was still reeling from the 2021 rally before the Terra collapse triggered the dreaded crypto winter.

Now, as prices are recovering, so has investor sentiment. It is currently sitting at a score of 55 on the Fear & Greed Index, showing a significant improvement over the last couple of months. What’s more, the index shows a steady increase over the last week.

It is no longer struggling to break out of the neutral territory, indicating that investors are now comfortable in accepting this as a bull rally, albeit a short one. It also points to heightened buying sentiment as investors rush to take advantage of the high prices and clock in some profits.

The index is now at an almost 100% increase from where it closed out in the last month of 2022 with a score of 28. This offers a complete 180-degree turn in how investors are viewing the market through this time.

Crypto Ending The Month Better Than It Started

The crypto market is already in a much better place than it was when January 2023 first started. In less than 30 days, the market has since added over $200 billion to its market cap, bringing it back to levels not seen since before the FTX collapse.

This much-needed recovery is a step in the right direction and it is herding January toward a point where it finished the month better than it started it. And as the buying sentiment around leading cryptocurrencies such as Bitcoin and Ethereum have ballooned, the market may still have more growth to come.

The crypto total market cap is now sitting just below the $1 trillion point but still shows potential for more upside. As the Fed is expected to not hike interest rates any further, it becomes a prime growth environment for risk assets such as cryptocurrencies.