The data shows that bitcoin market sentiment is on the verge of venturing into extreme greed. Here’s what this means for the price of the cryptocurrency.
bitcoin Fear and Greed Index Is Just Below Extreme Greed Right Now
The “Fear and Greed Index” is an indicator that tells us about the sentiment shared by the majority of investors in the bitcoin sector and cryptocurrencies in general.
According crypto/fear-and-greed-index/” target=”_blank” rel=”noopener nofollow”>AlternativeIts creator, the index takes these factors into account when calculating mindset: volatility, market volume, social media sentiment, market cap dominance, and Google Trends.
The Fear & Greed Index uses a numerical scale ranging from 0 to 100 to indicate sentiment. Metric values above 54 suggest greed among traders, while those below 46 imply the presence of fear. The region located between these two thresholds naturally belongs to a neutral territory.
These three feelings are not the only regions that the indicator has; There are also two special feelings called “extreme greed” and “extreme fear.” The first of them occurs when the index reaches 75 or more, while the second occurs at 25 or less.
Now, here’s what sentiment looks like in the current market according to the bitcoin Fear & Greed Index:
<img decoding="async" class="alignnone wp-image-267201 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-Sentiment-on-the-Verge-of-Extreme-Greed-What-It.png" alt="bitcoin greed” width=”368″ height=”328″ data-recalc-dims=”1″/>
The metric appears to have a value of 74 at the moment | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
The bitcoin Fear & Greed Index is worth 74 right now, suggesting that the market is deep into greed territory, just one step away from crossing over into extreme greed.
Historically, extreme sentiments have had some level of importance for the price of btc, as the asset’s major highs and lows have taken shape while the market held these sentiments.
This relationship, however, has been contrary to what might initially be assumed. In reality, periods of extreme fear have occurred when buying opportunities have presented themselves, as the asset is likely to form bottoms at that time, while extreme greed has been where spikes have occurred.
Traders often called “contrarian investors” are those who have become aware of this pattern and use it to time their buying and selling moves. Warren Buffet’s famous quote sums up the idea best: “Be fearful when others are greedy and greedy when others are fearful.”
Given that the bitcoin Fear & Greed Index is now right on the brink of extreme greed, it may mean that the cryptocurrency could be about to overheat.
However, an inspection of the indicator’s recent trend reveals that sentiment has been floating in this region for a while now, coming close many times, but never reaching extreme greed.
<img loading="lazy" decoding="async" class="alignnone wp-image-267208 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/1701356970_912_Bitcoin-Sentiment-on-the-Verge-of-Extreme-Greed-What-It.png" alt="bitcoin Fear and Greed Index” width=”980″ height=”457″ srcset=”https://bitcoinist.com/wp-content/uploads/2023/11/chart-10.png?w=1115 1115w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-10.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-10.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-10.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2023/11/chart-10.png?w=750 750w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
Looks like the indicator has been near the extreme greed territory for a while now | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
It seems that bitcoin investors have become quite greedy lately, but they are not yet ready to embrace the euphoria that has been associated with heated bull markets in the past.
A contrarian investor would perhaps be monitoring the situation closely, as if a breakout in extreme greed were to occur, it could be a signal to sell the coin.
btc Price
bitcoin has become a bit stale recently as the asset has been mainly consolidating between $37,000 and $38,000.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/11/Bitcoin-Sentiment-on-the-Verge-of-Extreme-Greed-What-It" alt="bitcoin price chart” width=”1534″ height=”869″/>
btc hasn't showed much volatility recently | Source: BTCUSD on TradingView
Featured image from iStock.com, TradingView.com charts, Alternative.me
