The data shows that bitcoin trader sentiment has turned to greed since the rally towards the $35,000 level.
bitcoin Fear and Greed Index Now Points to ‘Greed’
The “Fear and Greed Index” is an indicator that tells us about the sentiment among investors in bitcoin and the cryptocurrency market in general. The index was created by crypto/fear-and-greed-index/” target=”_blank” rel=”noopener nofollow”>Alternative and takes into account the following factors: volatility, volume, social media sentiment, market cap dominance, and Google Trends.
The metric uses a numerical scale ranging from 0 to 100 to represent sentiment. When the indicator has a value above 54, it means that investors share a majority sentiment of greed at the moment.
On the other hand, the metric being less than 46 implies that the general sentiment in the market is currently one of fear. The territory between these two regions naturally suggests a neutral mentality.
Now, this is what the bitcoin Fear & Greed Index looks like right now:
<img decoding="async" class="alignnone size-full wp-image-261203 aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Traders-Embrace-Greed-After-12-Rally-Time-to-Sell.png" alt="bitcoin greed” width=”364″ height=”330″/>
The value of the index appears to be 66 right now | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
As shown above, the bitcoin Fear & Greed Index has a value of 66, implying that market sentiment is firmly within greed territory. Just yesterday investors remained neutral on the cryptocurrency as the index had a value of 53.
This strong change in mindset came with the rapid 12% growth the asset has experienced over the past 24 hours. The following graph shows the trend of the indicator.
<img decoding="async" class="alignnone wp-image-261207 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/1698174849_440_Bitcoin-Traders-Embrace-Greed-After-12-Rally-Time-to-Sell.png" alt="bitcoin Fear and Greed Index” width=”980″ height=”455″ srcset=”https://technicalterrence.com/wp-content/uploads/2023/10/1698174849_440_Bitcoin-Traders-Embrace-Greed-After-12-Rally-Time-to-Sell.png 980w, https://bitcoinist.com/wp-content/uploads/2023/10/chart-6-640×297.png 640w, https://bitcoinist.com/wp-content/uploads/2023/10/chart-6-768×357.png 768w, https://bitcoinist.com/wp-content/uploads/2023/10/chart-6-750×348.png 750w, https://bitcoinist.com/wp-content/uploads/2023/10/chart-6.png 1117w” sizes=”(max-width: 980px) 100vw, 980px”/>
Looks like the value of the index has shot up over the past day | Source: crypto/fear-and-greed-index/" target="_blank" rel="noopener nofollow">Alternative
You can see from the chart that the metric is currently the highest since April of this year. However, historically high values of the indicator have not been a good sign, as highs have often formed for btc when investors become too greedy.
However, major spikes in the cryptocurrency have typically formed only when sentiment has reached extreme greed territory, which occurs at values of 75 and above.
The current value of the metric is therefore notably below this mark today. Something to keep in mind, however, is that while peaks are much more likely to form within extreme greed, the possibility of a peak still increases within the region of normal greed.
The aforementioned April peak of the bitcoin Fear & Greed index, for example, also coincided with a peak for the cryptocurrency. Because of this relationship that seems to exist between sentiment and price, some traders follow it to time their movements.
These investors are called “contrarian traders” because they do the opposite of what the broader market expects. Warren Buffet’s famous quote sums up this idea: “Be fearful when others are greedy and greedy when others are fearful.”
Based on the current greed sentiment, perhaps a contrarian investor is now watching closely to see if sentiment tilts even further sideways in the coming days, or may even decide to sell right here.
btc Price
bitcoin crossed the $35,000 mark yesterday, but the asset has since seen some pullback as it is now trading at $34,500.
<img decoding="async" loading="lazy" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/BG2hepoA/" alt="bitcoin price chart” width=”1534″ height=”869″/>
btc has observed explosive growth in the past day | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, TradingView.com charts, Alternative.me
