Data shows that Bitcoin sentiment has been on the verge of extreme greed lately, but investors don’t yet seem ready to embrace the hype.
Bitcoin’s Fear and Greed Index Currently Points to ‘Greed’
“Fear and Greed Index” refers to an indicator created by substitute This tells us about the overall sentiment among investors in Bitcoin and the broader cryptocurrency sector.
This indicator calculates sentiment as a number between zero and one hundred. This calculation uses data from the following five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends.
When the value of this measure is greater than 53, it means that investors share feelings of greed. On the other hand, below 47 indicates the presence of fear in the market. The area between these two thresholds corresponds to a pure, neutral mindset.
Now, here’s what the Bitcoin Fear and Greed Index looks like right now:
Looks like the value of the index is 70 at the moment | Source: Alternative
As shown above, the last value of the Fear and Greed Index was 70, indicating that traders as a whole have noticeable feelings of greed. However, this is not a new development, as the market has actually been in this area for the past week or so.
The chart below shows the trend in this indicator over the past year.
The value of the metric appears to have shot up in recent days | Source: Alternative
The chart shows that the index had fallen into the fear zone earlier in the month due to the downward movement seen in the price. However, trader sentiment has been on the rise as the recovery picks up.
In this latest greed series, the index reached a high of 73. This value is close to a special zone called extreme greed, which occurs at 75 and above.
In the past, the index has generally broken through this area during market euphoria. Such a large amount of hype is something that has historically driven prices up.
There is also an area similar to the aspect of fear, known as extreme fear (occurring at age 25 or younger). Very deep market desperation levels have generally facilitated currency bottoms.
Bitcoin’s Fear and Greed Index has stagnated beyond the extreme greed zone in the past few days, and it is likely because the rally has seen a setback.
However, the fact that investors have not yet sat on the hype train may be a positive sign of the success of this round, as it means that at least excessive greed has not become an obstacle for it yet.
Bitcoin price
Bitcoin is back at $67,300 after surpassing $69,000 two days ago.
Looks like the price of the coin has seen a plunge recently | Source: BTCUSDT on TradingView
Featured image from Dall-E, Alternative.me, chart from TradingView.com