Market sentiment "unfreezes": Fear and Greed Index returns to neutral, Bitcoin aims for $94,000 amid geopolitical turbulence

In the first trading week of 2026, the cryptocurrency market experienced a key psychological turning point. The widely tracked “Crypto Fear and Greed Index” broke out of the “Fear” zone for the first time since the flash crash in October 2025, rising to a neutral 40 points, indicating a preliminary easing of nearly three months of extreme pessimism. Meanwhile, Bitcoin demonstrated resilience in the face of a sudden geopolitical event—U.S. military action against Venezuela—showing a stark contrast to traditional risk assets, with its price remaining steady above $92,000.

The true driving force comes from massive institutional capital inflows: on January 2nd, a single-day net inflow of $645.8 million into Bitcoin spot ETFs not only pushed the price through a critical technical breakout but may also signal the start of a new Bitcoin-led market rally for the new year. Currently, the total market capitalization has regained above $3.25 trillion, and investors are closely watching whether this series of positive signals can coalesce into the beginning of a new upward trend.

Market Sentiment Reaches a Turning Point: Fear and Greed Index First Returns to “Neutral”

After nearly three months of suppression and anxiety, the collective sentiment of the cryptocurrency market finally shows signs of breaking the ice. According to data from the authoritative platform CoinMarketCap, its compiled “Crypto Fear and Greed Index” officially rose to 40 on Sunday (early January), entering the “Neutral” zone. This numerical change carries significant symbolic meaning: it is the first time since the historic market crash on October 10, 2025, that the index has moved away from “Fear” and even “Extreme Fear.” For investors who constantly monitor market psychology, this is not just a number shift but a clear psychological signal—the darkest panic-selling phase may have come to an end.

Looking back at the origin of this emotional “deep winter,” the market plunge in October 2025 was undoubtedly the starting point. Bitcoin’s price, after reaching a record high of over $125,000, suddenly collapsed, dropping about 35% in a very short period and approaching the $80,000 level. The altcoin market was even more brutal, with many tokens losing over half their market cap overnight, and the total market cap of altcoins excluding Bitcoin and Ethereum once plummeted by about 33% in a single day. The market’s brutal cleansing left a deep imprint on investors’ minds and drove the “Crypto Fear and Greed Index” down to a low of 10 in November, entering the “Extreme Fear” zone. Therefore, the current rebound to 40 can be understood as the market gradually recovering from severe trauma, beginning to assess asset value and future risks with a relatively calm, rather than panicked, perspective.

However, “Neutral” itself is a state full of contradictions and tension. It signifies a significant reduction in irrational selling pressure but also hints that strong FOMO (Fear of Missing Out) emotions have yet to be ignited. Experienced market analysts often interpret this state as a “bottoming phase” or a “preparatory stage for a new trend.” Investors are no longer fleeing the market at all costs but remain cautious and watchful for more definitive, sustainable catalysts. Currently, ongoing geopolitical uncertainties (such as the recent Venezuela incident) and relatively subdued retail investor interest are generally seen as macro headwinds hindering further market movement toward “Greed.” The market is walking a delicate tightrope, and the “thawing” of sentiment is undoubtedly a crucial first step toward normalcy.

Resilience Under Geopolitical Shock: Bitcoin Demonstrates “Atypical” Asset Characteristics

Just as market sentiment attempts internal repair, external macroeconomic factors have delivered a shock. Last weekend, the U.S. announced a large-scale military operation against Venezuela, claiming control over President Maduro. This sudden geopolitical crisis instantly dominated global headlines and triggered deep concerns about potential chain reactions in traditional financial markets. Historically, such sudden geopolitical conflicts tend to rapidly trigger a sell-off in risk assets worldwide, with stocks and commodities falling, and capital flowing into the dollar, U.S. Treasuries, and gold as safe havens.

However, Bitcoin’s price response to this event exhibited a noteworthy “atypical” trait. After the news broke, Bitcoin did not experience the panic sell-off widely expected but instead showed remarkable resilience amid volatility, holding steady around $91,000. This behavior sharply contrasts with the reflexive declines of stocks and other traditional risk assets during macro black swan events. This phenomenon has sparked widespread discussion: Is Bitcoin beginning to exhibit “safe-haven” qualities similar to gold in certain scenarios? Or are the core endogenous factors driving Bitcoin’s price—such as the influx of institutional capital via spot ETFs, upcoming halving narratives—so powerful that they can temporarily shield it from external geopolitical noise?

Market observers are divided on Bitcoin’s unconventional performance. Some believe that the scope of the current event’s impact on global energy supply chains and financial systems may be limited, making its influence on Bitcoin—an international, non-sovereign digital asset—more indirect. They point out that Bitcoin’s price increasingly depends on internal cycles, capital flows, and technical factors. Others adopt a more cautious stance, suggesting the real test will come after the U.S. stock market opens on Monday. If traditional markets experience significant volatility and risk asset sell-offs due to this event, negative sentiment could spill over into the crypto space, making it difficult for Bitcoin to remain unaffected. In any case, Bitcoin’s stable performance amid geopolitical turmoil demonstrates that its market structure, investor base, and price formation mechanisms are now more complex and mature than before, no longer simply “buying the dip” on all macro bad news.

Institutional Capital Returns Strongly: $645.8 Million ETF Inflows Ignite the Engine

If the market sentiment recovery provided psychological support for the rally, and geopolitical tests verified asset resilience, then the core physical engine that propelled Bitcoin back to $91,000 and enabled a key technical breakout was undoubtedly the surge of institutional capital. On January 2, 2026, a key data point lit up the market: the U.S. Bitcoin spot ETF recorded a massive single-day net inflow of $645.8 million. This flood of capital occurred during a period when market liquidity is typically relatively thin at the start of the year, and its signaling effect, combined with actual buying pressure, was amplified exponentially, becoming a decisive force in reversing short-term trends.

The significance of this massive inflow can be viewed from multiple dimensions. First, it directly creates strong spot buying pressure. According to ETF mechanics, issuers must purchase an equivalent amount of Bitcoin in the spot market to create new fund shares corresponding to the inflow. This means over $645 million of real demand entered the market in a short time, absorbing available circulating supply. Second, it sends a very clear confidence signal to the entire market: large institutions, family offices, wealth management platforms, and compliant investors are seizing the beginning of the new year to reallocate or increase their strategic Bitcoin holdings. This action has a strong demonstrative effect, encouraging more cautious funds to follow suit. Finally, sustained and large-scale ETF buying systematically and daily consumes the limited floating supply in the market. When this rigid demand encounters supply tightness caused by long-term holders’ reluctance to sell, price increases become an inevitable outcome consistent with economic principles.

Current Core Indicators of the Bitcoin Market

Bitcoin Spot Price: approximately $92,996

Crypto Fear and Greed Index: 40 (Neutral)

Altcoin Season Index: 25 (Clear Bitcoin dominance phase)

Single-day net inflow into spot ETF (Jan 2): $645.8 million

Total Cryptocurrency Market Cap: $3.25 trillion

24-hour total market trading volume: approximately $75 billion

In tandem with the massive ETF capital inflow, the overall activity and scale of the crypto market are also rebounding. The total market cap remains firmly above $3.25 trillion, with daily trading volume holding around $75 billion, indicating increased activity from institutions and large investors. Another key indicator—the “Altcoin Season Index”—currently stays at a low of 25, clearly showing that the market remains in a strong “Bitcoin-dominant” phase. This market structure is often seen as a classic feature of an early, healthier, and more sustainable bull market: smart money first concentrates in the most core, liquid, and narrative-strong flagship asset (Bitcoin), and after its valuation is fully reassessed and the valuation anchor is raised, capital gradually spills over into more speculative altcoins. The current situation suggests the market may be in the early stages of this classic capital rotation process.

Technical Analysis: Triangle Breakout Confirmed, Upward Path and Risk Levels Coexist

Supported by strong fundamental capital flows, Bitcoin’s weekly and daily charts are also signaling a long-awaited positive technical pattern. After nearly a month of convergence, consolidation, and bulls versus bears battles, Bitcoin finally confirmed an effective upward breakout from a key “symmetrical triangle” pattern. This decisive breakout above the important resistance at $89,500 officially signals the end of the exhausting range-bound trading since December 2025 and strongly suggests that a new upward wave may have quietly begun.

Switching to a more detailed 4-hour chart, one can observe the health of the current upward structure. Prices are trading near $91,260, forming a series of higher lows, with volume steadily increasing—typical signs of orderly demand absorption and new capital inflows. Regarding trend momentum indicators, the short-term moving averages provide further confirmation: the 50-period exponential moving average (EMA) has successfully crossed above the 100-period EMA, forming a classic “golden cross,” confirming a significant short-term bullish momentum. Additionally, the Relative Strength Index (RSI) hovers around 69, close to the traditional overbought threshold of 70, but still with room to run, indicating robust upward momentum without being in extreme overbought territory, which favors continuation.

K-line patterns also support the bullish outlook. A full-bodied “bullish engulfing” candle previously completed a key breakout of the triangle’s upper resistance. Subsequently, the appearance of “spinning top” or “doji” candles near $92,000 is often interpreted by technical traders as short-term consolidation, profit-taking, and a buildup of new bullish energy rather than a trend reversal. Combining these multiple technical factors, analysts generally set the next short-term target zone between $93,500 and $94,600. A volume-backed breakout above this zone would make the path toward $98,000 and even testing the symbolic $100,000 in Q1 2026 clearer. Of course, strict risk management remains essential: if the price closes back below $88,400, the breakout could be a “false breakout,” and the market may revert to a wide-range consolidation, possibly triggering a new short-term technical correction.

Deep Dive into the Crypto Fear and Greed Index

For many new market participants, the “Crypto Fear and Greed Index” is a familiar yet not fully understood sentiment quantification tool. It’s important to clarify that it is not generated by a mysterious black-box algorithm but is an aggregated sentiment indicator based on multiple market data sources. The index typically considers several dimensions: market volatility (sharp increases in volatility often correlate with fear), trading volume and momentum, social media sentiment analysis, investor surveys, Bitcoin dominance (a rising dominance may suggest risk aversion, less greed), and Google search trend weights.

The index is scaled from 0 to 100, with classic sentiment zones: 0-24 “Extreme Fear,” 25-49 “Fear,” 50-74 “Greed,” and 75-100 “Extreme Greed.” Backtested historically, this index often serves as a contrarian indicator: when it remains in “Extreme Greed” for extended periods, it may signal over-enthusiasm and a short-term top; conversely, when it dips into “Extreme Fear,” it often indicates excessive pessimism, potentially offering opportunities for medium- to long-term investors. The recent rebound from “Fear” to “Neutral” can be seen as a healthy process of moving away from a potential “emotional bottom,” laying a psychological foundation for subsequent market moves.

The Complex Relationship Between Geopolitical Risks and Crypto Assets

Bitcoin and other cryptocurrencies, since their inception, have been endowed with the genes of “censorship resistance,” “decentralization,” and “borderless” attributes, creating a natural and complex link with global geopolitical risks. Theoretically, in regions with escalating conflicts, rising sovereign credit risks, or tightening capital controls, there is a pressing demand for cross-border, non-sovereign stores of value, which could benefit Bitcoin. Recent cases—from the Russia-Ukraine conflict to tensions in the Middle East—have temporarily stimulated demand for Bitcoin as a safe haven or asset transfer tool.

However, real-world transmission mechanisms are far more complex. First, the crypto market as a whole remains highly volatile and speculative, and within traditional financial frameworks, it is still largely classified as a “high-risk asset.” This means that during initial phases of global risk events, it is likely to be sold off first in a “liquidity scramble” response. Second, geopolitical events that lead to global monetary policy shifts—such as major central banks tightening liquidity to combat inflation—can exert downward pressure on all risk assets, including Bitcoin. The recent stability of Bitcoin during the Venezuela incident is a positive case but not an eternal rule. Investors need to analyze each event’s nature (localized conflict vs. systemic risk), the immediate global financial liquidity situation, and the specific cycle stage of Bitcoin itself. In the long run, emerging geopolitical risks are part of the macro narrative driving broader adoption and recognition of Bitcoin; in the short term, they serve as tests of market depth, investor confidence, and asset resilience.