The crypto market is showing an impressive shift in sentiment: the fear and greed index jumped 16 points in a day, reaching 62. This comes amid a powerful bitcoin rally, which rose 11.7% and came close to the $71,850 level. Such a leap is one of the sharpest changes in market participant sentiment in 2026.
My analysis shows that the driver of this momentum was not only the growth of the first cryptocurrency itself, but also the synchronized movement of altcoins. Ethereum rose 19.6% to $2,285, Solana gained 13.25%, and XRP climbed 14.3%. As a result, bitcoin's market capitalization increased to $1.44 trillion, amplifying the domino effect across the market.
Index structure and key drivers
The fear and greed index is based on five components, where volatility and market speed play a decisive role, each contributing 25% to the final score. Both of these indicators sharply reversed direction as prices moved higher, which triggered such a significant shift on the scale.
Particular attention deserves the behavior of short positions. The sudden rally forced traders betting on declines to close their positions at a loss of approximately $1.23 billion. This short squeeze created a compounding effect — buying assets at higher prices only strengthened the upward momentum.
Why the shift in sentiment should be treated with caution
Context remains critically important. Just a week ago, the index stood at 29, and a month ago at 25, deep in the "extreme fear" zone. Throughout July and early August, it barely rose above 35. At the same time, liquidity has not returned as quickly as sentiment changed: stablecoin reserves on exchanges fell by about 20%, indicating a reduction in available funds that could cushion a potential decline.
Notably, bitcoin's dominance has been testing a support level since July, and this is precisely why debates about the onset of altcoin season remain open. Unlike sentiment indicators, this signal has barely moved, pointing to the structural resilience of the first cryptocurrency's positions.
Leverage works both ways. Short liquidations pushed prices higher, but now there are fewer sellers left to squeeze. A single calm session could quickly dampen both volatility and momentum. One day of greed by itself proves nothing, but the index rarely moves 16 points without continuation in one direction or the other.
My expert assessment: such a sharp reversal in sentiment is a classic sign of a short squeeze, not the start of a sustained bull trend. Watch for the return of liquidity: if the inflow of stablecoins does not recover, current greed could quickly turn into disappointment. The coming days will be decisive in determining the true strength of this move.