Data shows that bitcoin market sentiment has returned to extreme greed territory as btc has recorded its rally past the $71,000 level.
bitcoin Fear and Greed Index Now Points to 'Extreme Greed'
The “Fear and Greed Index” is an indicator developed by crypto/fear-and-greed-index/” target=”_blank” rel=”nofollow”>Alternative That tells us about the general sentiment among investors in bitcoin and the cryptocurrency market in general.
This index represents sentiment as a score between zero and one hundred. To calculate this value, the indicator takes into account data from these factors: volatility, trading volume, social media sentiment, market capitalization dominance, and Google Trends.
When the indicator has a value of 46 or less, it means that the average investor has a feeling of fear at the moment. On the other hand, a value of 54 or higher implies that market shares have a majority greed mentality. Naturally, the intermediate region between these two (47 to 53) corresponds to neutral sentiment.
Now, here is what the latest value of the bitcoin Fear & Greed Index looks like:
<img decoding="async" class="alignnone wp-image-599754 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png" alt="bitcoin Fear and Greed Index” width=”367″ height=”330″ loading=”lazy” data-recalc-dims=”1″/>
The index appears to have a value of 81 at the moment | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
As you can see above, the bitcoin Fear & Greed Index is at 81 right now, meaning it is deep into the greed region. In fact, this value is so deep that it falls within a territory known as “extreme greed.”
Extreme greed occurs when the index reaches values above 75. Fear also has its own extreme region; this occupies values below 25. Historically, these two sentiments have proven to be particularly significant for the market.
btc and other assets in the sector have often tended to move in the opposite direction to what most expect. In the territory of extreme feelings, this expectation is naturally the strongest and therefore the probability of a counter move occurring is also the highest.
For this reason, major highs and lows in the price of bitcoin have generally formed when the cryptocurrency has been within the respective extreme zones.
Earlier in the month, the Fear & Greed Index had assumed especially high extreme greed levels as the asset's rally to new all-time highs (ATHs) had occurred.
Two of the major highs of this period, including the current ATH, coincided with spikes in the indicator, implying that overheated sentiment may have played a role once again.
<img loading="lazy" decoding="async" class="alignnone wp-image-599755 size-full aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png" alt="bitcoin Fear and Greed Index” width=”1119″ height=”533″ srcset=”https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png?w=1119 1119w, https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png?w=460 460w, https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png?w=860 860w, https://technicalterrence.com/wp-content/uploads/2024/03/1711473442_460_Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000.png?w=750 750w” sizes=”(max-width: 1000px) 100vw, 1000px” data-recalc-dims=”1″/>
Looks like the value of the metric has turned around in the past day | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
However, with the asset's recent decline, sentiment also cooled and moved out of extreme greed territory, as can be seen in the chart above. In bullish periods, sentiment returning to the normal greed region can be a positive signal for new bullish moves to begin.
And, in fact, this time the same has also happened for the cryptocurrency, as its price has recovered noticeably in recent days. With the coin returning to $71,000, sentiment has also heated up again, hence the latest value of the index pointing to extreme greed.
The aforementioned highs from the beginning of the month occurred at Fear and Greed Index values of 90 and 88, respectively, suggesting that the current extreme greed value of 81 may not be too high for another spike to be likely.
btc Price
bitcoin had broken through the $71,000 level earlier in the day, but the digital asset has since recorded a small pullback towards $70,700.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/03/Bitcoin-Sentiment-Returns-to-Extreme-Greed-as-BTC-Surpasses-71000" alt="bitcoin price chart” width=”1534″ height=”854″/>
The price of the coin seems to have sharply risen over the past two days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Alternative.me, chart from TradingView.com
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