Bitcoin Breaks Free from Fear: Neutral Sentiment Sparks Market Optimism

 

Bitcoin Market Sentiment Improves as Crypto Fear & Greed Index Moves to Neutral Zone

The cryptocurrency market has shown signs of stabilization this weekend as the Crypto Fear & Greed Index climbed out of the fear zone, entering neutral territory for the first time since mid-October. The shift in sentiment comes after a period of heightened volatility triggered by President Donald Trump's announcement of new China tariffs, which initially caused widespread market panic.

Bitcoin, the largest digital asset by market capitalization, surged back toward $115,000 over the weekend, marking a notable recovery from the yearly low that followed the October 10 tariff declaration. Analysts note that the announcement had previously sparked liquidations exceeding $19 billion in leveraged positions across major crypto exchanges, contributing to one of the sharpest market sell-offs of 2025.

Fear & Greed Index Reflects Changing Investor Mood

The Fear & Greed Index, a popular sentiment gauge in the cryptocurrency market, rose nearly 20 points in just one week, signaling a more balanced investor outlook. For context, the index had fallen to 24 during the October 10 sell-off, reflecting extreme fear among traders. This metric, which combines market volatility, trading volume, momentum, social media activity, and other indicators, serves as a barometer for the overall mood of crypto participants. A neutral reading suggests that investors are neither panicked nor overly euphoric, providing a potentially stabilizing force for Bitcoin prices.

Market participants and analysts alike interpret the neutral sentiment as a positive signal. With fear subsiding, some investors may be more willing to re-enter the market cautiously, increasing liquidity and helping to stabilize prices.

Glassnode Data Shows Reduced Selling Pressure

Supporting the change in sentiment, blockchain analytics firm Glassnode reported that Bitcoin selling pressure has declined significantly in recent days. According to their data, both spot and futures Cumulative Volume Delta — which measures net buying and selling activity — have flattened for the first time since the mid-October crash. This plateau indicates a reduction in aggressive liquidation activity that had previously driven sharp price swings.

Funding rates, another key indicator of market leverage, remain below the neutral threshold of 0.01%, highlighting that traders are avoiding excessive long positions. Over the past two weeks, funding rates briefly turned negative multiple times, suggesting that market participants are approaching the recent volatility with caution rather than attempting to exploit it through leverage.

Potential Catalysts for Bitcoin Price Recovery

Beyond technical indicators, macroeconomic factors could further influence Bitcoin’s trajectory in the coming weeks. Data from CME Group’s FedWatch tool suggests a 96.7% probability that the U.S. Federal Reserve will cut interest rates by a quarter percentage point at its scheduled meeting on October 29. Historically, such rate cuts have supported risk-on asset classes, including cryptocurrencies, by lowering borrowing costs and encouraging investment in higher-risk markets.

The timing of the potential Fed action, combined with reduced market panic and a stabilizing Fear & Greed Index, could create conditions favorable for continued upward momentum in Bitcoin prices. Analysts highlight that a combination of improved sentiment, easing leverage, and macroeconomic tailwinds often contributes to sustained rallies in digital asset markets.

Historical Context: How Tariff Announcements Impacted Crypto Markets

The October 10 tariff announcement had initially caused a dramatic drop in Bitcoin prices and a spike in market fear. The Fear & Greed Index fell from 71, a level typically associated with market greed, to just 24 within days. This steep decline reflected the magnitude of panic among leveraged traders, who were forced to liquidate positions as exchanges triggered margin calls. Bitcoin’s short-term volatility in response to geopolitical and economic news has become a defining characteristic of its market behavior, highlighting the sensitivity of digital assets to global events.

Market experts note that understanding these behavioral patterns is crucial for investors. While rapid drops often incite fear, they can also present opportunities for disciplined traders and long-term holders. Historically, periods of heightened market fear have been followed by consolidation phases and eventual recovery, particularly when broader macroeconomic conditions remain supportive.

Investor Behavior and Market Implications

The recent flattening of Bitcoin selling pressure has several implications for market participants. First, the reduction in aggressive liquidations can mitigate the risk of further sharp drops in price. Second, neutral sentiment may encourage cautious re-entry by retail investors and institutional participants who had previously remained on the sidelines.

Glassnode’s analysis further highlights a divergence between mid-sized and large holders. While whale wallets — those containing millions of dollars’ worth of Bitcoin — have maintained or slightly increased positions, mid-sized wallets have been more active in selling. This distinction suggests that while momentum-driven investors may be gradually exiting the market, long-term holders continue to support Bitcoin prices by retaining their positions.

Future Outlook: What Traders Should Watch

Looking ahead, traders and investors are closely monitoring several indicators that could influence Bitcoin’s near-term trajectory. Key levels of support and resistance will determine whether the current recovery gains traction or if another correction is imminent. Analysts emphasize that the neutral Fear & Greed Index, combined with reduced selling pressure and favorable macroeconomic signals, provides a cautiously optimistic outlook for Bitcoin.

However, market watchers caution that potential external shocks, such as geopolitical tensions or unexpected regulatory changes, could quickly reverse sentiment. As such, maintaining awareness of broader economic developments remains critical for anyone participating in the crypto market.

In addition to macroeconomic factors, on-chain metrics, including wallet activity, transaction volume, and liquidity measures, will provide valuable insights into Bitcoin’s supply-demand dynamics. Investors are advised to consider these data points alongside market sentiment when making strategic decisions.

Conclusion

The cryptocurrency market has demonstrated remarkable resilience in recent days as the Fear & Greed Index returned to neutral territory, signaling improved investor sentiment. Bitcoin’s recovery toward $115,000 reflects a combination of reduced selling pressure, cautious market positioning, and the potential for supportive monetary policy actions by the Federal Reserve.

While uncertainties remain, the current environment suggests a stabilizing market with opportunities for both short-term traders and long-term investors. As market participants weigh recent data and macroeconomic developments, the balance between fear and greed will continue to play a decisive role in Bitcoin’s performance in the coming weeks.

Investors should remain vigilant, monitor key indicators, and consider a diversified approach to mitigate risk while capitalizing on potential market opportunities.

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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