Is the Crypto Fear and Greed Index asking you to HODL? – Assessing…

• The market sentiment has been steadily bullish over the past three weeks
• While on-chain metrics showed new highs were likely for Bitcoin, volatility is to be expected as it trades near its all-time high

The crypto market has experienced a volatile week.

 It began with losses for both Bitcoin [BTC] and altcoins, but those losses were quickly recovered on the 2nd and the 3rd of July, extending the recent rally.

Since the 23rd of June, Bitcoin has gained 6.31%, while the broader altcoin market is up 7.6%.

However, the 4th of July saw renewed selling pressure as short-term holders took profits. Adding to the uncertainty is the looming deadline for Trump-era tariffs. 

While the U.S. has reached trade agreements with countries like China and Vietnam, deals with key partners such as Japan, South Korea, and the European Union remain unresolved.

Fears of a potential trade war may be contributing to the recent sell-off.

Despite the market jitters, investor appetite remains strong. Spot Bitcoin and Ethereum [ETH] ETFs recorded robust inflows on the 3rd of July. 

Notably, Bitcoin saw a $601 million inflow—the largest single-day surge since the 22nd of May, when it recorded $934 million.

Crypto Fear and Greed Index shows bullish market sentiment

Source: Alternative.me

At the time of writing, the Crypto Fear and Greed Index reading was a healthy 73, signaling greed in the market.

With Bitcoin just 3.9% below its all-time high, plenty of holders were in profit. This explains the short-term sell pressure seen on the 4th of July.

Source: Alternative.me

A greed signal does not necessarily guarantee an immediate bearish price reversal.

It’s worth noting that the Crypto Fear and Greed Index hit 78 on the 23rd of May. That was the same day Bitcoin reached a high of $111.8K.

Notably, the index has now returned to a similar level, at press time.

This may have prompted some holders to take profits, especially since BTC is currently trading within a defined range.

Source: TOTAL2 on TradingView

Thus, altcoins have underperformed compared to Bitcoin, signaling potential weakness in the broader market. 

This serves as a caution for altcoin investors to prepare for increased volatility, especially if Bitcoin faces further losses in the coming days.

While the timing of Bitcoin’s next all-time high remains uncertain, on-chain data suggests the upward move may not be far off. 

Long-term holders may benefit from staying patient and continuing to HODL.