Data suggests that Bitcoin sentiment has cooled due to extreme greed as the downward price movement of Bitcoin and other cryptocurrencies continues.
Bitcoin Fear and Greed Index Now Points to “Greed”
“Fear and Greed Index” is an indicator created by substitute This tells us about the average sentiment among investors in the broader Bitcoin and cryptocurrency markets.
This scale uses a numerical scale from zero to one hundred to represent emotions. All values above the 53 mark indicate investors feeling greedy, while those below 47 indicate fear in the market. The area between the pieces indicates a neutral mindset.
Now, here’s what our Bitcoin Fear and Greed Index says about current market sentiment:
The value of the index appears to be 74 at the moment | Source: Alternative
As can be seen above, the index value is 74, which means that investors are sharing the sentiment of greed at the moment. This current value is also very deep in the region, so deep that it lies directly on the border of a special region called Extreme Greed.
The market experiences extreme greed whenever the index crosses the 75 mark. There is also a similar zone to the fear side, known as extreme fear, which occurs below the age of 25.
Extreme sentiment has historically been of great importance for Bitcoin and other cryptocurrencies, as major tops and bottoms tend to occur in these areas.
The relationship between sentiment and price was inverse, meaning that extreme greed was where the peaks occurred, while extreme fear was where the bottoms occurred.
During the final phase of an uptrend, the indicator generally spent some time inside the extreme greed zone. The gauge was in the area just yesterday.
Looks like the value of the metric has registered a cooldown in recent days | Source: Alternative
The change in sentiment has come as BTC has seen a pullback and the altcoin market has seen a collapse. Given the historical pattern that Bitcoin has typically observed, this recent slowdown in investor sentiment could be positive and perhaps allow the rally to continue.
In some other news, the estimated leverage ratio for the BTC-USDT pair has seen a decline recently, as noted by CryptoQuant Founder and CEO, Ki Young Ju, in X mail.
The trend in the BTC-USDT Futures Leverage Ratio over the last couple of years | Source: @ki_young_ju
The estimated leverage ratio measures the average amount of leverage chosen by futures market users. The fact that this metric has recently registered a decline could be constructive for Bitcoin, as it means there is less risk of a chaotic mass liquidation event.
Bitcoin price
Bitcoin fell below $94,300 yesterday, but it appears that the coin was quick to recover as its price has already returned to $98,500.
The price of the coin appears to have seen a pullback during the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, Alternative.me, Chart from TradingView.com