The bitcoin Fear & Greed Index shows that sentiment around the asset has cooled a bit recently, something that could pave the way for a rebound.
bitcoin Fear and Greed Index Has Declined Recently
The “Fear and Greed Index” is an indicator created by crypto/fear-and-greed-index/” target=”_blank” rel=”nofollow”>Alternative which informs us about the average sentiment present among investors in bitcoin and the cryptocurrency market in general.
To determine the trader's mindset, the index takes into account these five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends.
The metric uses a numerical scale ranging from zero to one hundred to represent this sentiment. A score of 46 or less implies the presence of fear among investors, while a score of 54 or more suggests greed in the market.
The territory between these two (47 to 53) naturally corresponds to the neutral mindset. In addition to these three feelings, there are also two extreme feelings called “extreme greed” and “extreme fear.”
Extreme greed occurs at values above 75, while extreme fear occurs below 25. Historically, these two sentiments have been quite relevant to the trajectory of btc.
Typically, highs have tended to form when investors have held the first sentiment, while lows are likely to occur when the market has been in the latter region.
Today, traders have an extreme greed mentality, as shown by the latest data from the bitcoin Fear & Greed Index.
<img decoding="async" class="alignnone size-medium wp-image-598440 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-Sentiment-Cools-Down-Will-Price-Recover-Soon.png" alt="bitcoin Fear and Greed Index” width=”368″ height=”329″ loading=”lazy” data-recalc-dims=”1″/>
Looks like the value of the metric is 77 at the moment | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
As is visible, the indicator value is 77 at the moment, which means that while it is within extreme greed, it is very fair. This is a new change from how it has been recently, as the graph below shows.
<img loading="lazy" decoding="async" class="alignnone wp-image-598444 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/1710774899_283_Bitcoin-Sentiment-Cools-Down-Will-Price-Recover-Soon.png" alt="Extreme bitcoin Greed” width=”860″ height=”406″ srcset=”https://www.newsbtc.com/wp-content/uploads/2024/03/chart_be381d.png?w=1128 1128w, https://www.newsbtc.com/wp-content/uploads/2024/03/chart_be381d.png?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/03/chart_be381d.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/03/1710774899_283_Bitcoin-Sentiment-Cools-Down-Will-Price-Recover-Soon.png 860w, https://www.newsbtc.com/wp-content/uploads/2024/03/chart_be381d.png?w=750 750w” sizes=”(max-width: 860px) 100vw, 860px” data-recalc-dims=”1″/>
The value of the indicator appears to have been going down recently | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
From the chart, you can see that the bitcoin Fear & Greed Index has recently largely remained within the extreme greed region. On the 14th of this month, the indicator reached the 88 mark and along with this high, the btc price recorded its current all-time high of around $73,800.
However, since this peak, the asset has plummeted and it seems that along with it, so has sentiment among traders. As mentioned above, spikes are more likely to occur when the market has shared an extreme greed mentality and this probability has generally only increased at the more extreme levels the metric has reached.
This could perhaps explain why the recent high occurred when it did. Another high this month, which occurred on the 5th, also coincided with high values in the Fear & Greed index (a peak of 90 this time).
Shortly after this previous spike and the cryptocurrency's plummet that followed, the asset found its bottom as the metric briefly broke out of the extreme greed region.
As the bitcoin Fear & Greed Index once again looks to fall outside of this territory, it is possible that a bottom for the price is also approaching this time. It now remains to be seen whether sentiment will cool enough in the coming days to leave the extreme region behind, at least temporarily.
btc Price
bitcoin had plummeted towards $64,500 over the weekend, but it seems like the coin has recovered a bit in the last day as it is now back up to $68,000.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-Sentiment-Cools-Down-Will-Price-Recover-Soon" alt="bitcoin price chart” width=”1534″ height=”854″/>
The price of the coin seems to have gone through some volatility recently | Source: BTCUSD on TradingView
Featured image by Yiğit Ali Atasoy on Unsplash.com, Alternative.me, TradingView.com chart
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