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The crypto market has entered a more cautious phase, as the Fear and Greed Index—used to gauge market sentiment—dropped to 70 on Monday.

This decline marks the lowest level since Donald Trump’s presidential victory last month.

The index, which ranges from 0 (extreme fear) to 100 (extreme greed), serves as a barometer for market emotions, guiding investors on potential buying or selling opportunities.

While still reflecting greed-driven confidence, the dip signals a growing awareness of risks as the market transitions away from its recent euphoric highs.

Following Trump’s election victory, the index surged to 94, reflecting peak market greed as investors drove Bitcoin toward its December highs.

However, the subsequent drop to 70 indicates a more measured approach among traders.

At 94, the market is often seen as overvalued, with unchecked optimism driving asset prices.

By contrast, 70 suggests caution is creeping in, with investors reassessing the potential for corrections or bubbles.

Bitcoin’s price trajectory mirrors this shift in sentiment.

Currently trading at approximately $95,488, the leading cryptocurrency has declined by over 8% in the past week.

This slide underscores how the Fear and Greed Index often correlates with Bitcoin’s performance—prices tend to spike when greed dominates but can retreat sharply as fear sets in.

The latest decline also highlights a subtle recalibration among investors.

While greed remains a dominant theme, market participants appear to be heeding warnings about overvaluation, suggesting a more balanced outlook compared to the fervour seen earlier.

As the year-end approaches, the question of Bitcoin’s holiday performance has come under scrutiny.

Historical trends offer little clarity, with the cryptocurrency displaying mixed behaviour during previous festive periods.

Some years have witnessed price surges in January, while others have seen declines.

One factor often cited is lower liquidity during the holidays, which can amplify price swings.

Yet, the absence of significant institutional involvement during these periods has, at times, contributed to price stability.

This year, external influences such as macroeconomic trends, Trump’s impending return to the White House, and the aftermath of 2024’s ETF approvals could dictate Bitcoin’s trajectory.

Bitcoin’s notorious volatility, a hallmark of its market dynamics, remains a central theme.

However, with the Fear and Greed Index now signalling a shift in sentiment, the holiday season may offer a quieter phase unless unexpected news reignites market activity.

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