Bitcoin's market sentiment has cooled off significantly heading into the new year, with prices retreating to $93,000 amid waning investor confidence.
The BitDegree Crypto Fear & Greed Index, a key metric tracking market sentiment, has fallen to 65 - its lowest reading since October. This represents a notable decline from November's peak of 94, though still remains in "greed" territory.
The leading cryptocurrency has shed 13.7% of its value over just 12 days, prompting many traders to seek refuge in stablecoins. The recent price action comes after an extended period of optimism driven by U.S. political developments, including pro-crypto election outcomes.
Veteran trader Peter Brandt suggests Bitcoin may be following what he terms a "Hump Slump Bump Dump Pump" pattern. This technical formation predicts a series of price movements - an initial rise, followed by a decline, partial recovery, another drop, and ultimately a rebound.
The sentiment gauge had maintained readings above 70 through November and December, buoyed by political tailwinds. The index incorporates various factors in its calculations, including market volatility, momentum, social media activity, and Bitcoin's market dominance.
Despite the recent cooling in sentiment, the current reading of 65 indicates the market remains tilted toward optimism, though investors appear to be proceeding with more caution compared to recent months.
The pullback highlights Bitcoin's characteristic volatility even as it trades near the $93,000 level - a price point that would have seemed astronomical just a few years ago.