Data shows that bitcoin investor sentiment has cooled to the lowest level since February, something that could facilitate a price rally.
bitcoin Fear and Greed Index Now Points to Simply “Greed”
The “Fear and Greed Index” is an indicator created 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 sector in general.
This metric uses a numerical scale from zero to one hundred to represent sentiment. To calculate the score, the index considers data from five factors: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends.
All indicator values above 53 suggest the presence of greed among investors, while below level 47 implies a fearful market. The region between these two corresponds to neutral sentiment.
This is what the latest bitcoin Fear & Greed Index value looks like:
<img decoding="async" class="aligncenter wp-image-601229 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/04/Bitcoin-Traders-No-Longer-Extremely-Greed-–-Sign-of-Bounce.png" alt="bitcoin Fear and Greed Index” width=”365″ height=”332″ loading=”lazy” data-recalc-dims=”1″/>
The value of the index appears to be 71 at the moment | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
As can be seen above, the bitcoin Fear & Greed Index currently has a value of 71, implying that investors share a majority sentiment of greed. Just yesterday, the index value had been noticeably higher than this, implying that there has been some cooling of sentiment in the last 24 hours.
Below is a chart showing the trend of the index over the past year.
<img loading="lazy" decoding="async" class="alignnone wp-image-601231 size-large aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/1712179269_681_Bitcoin-Traders-No-Longer-Extremely-Greed-–-Sign-of-Bounce.png" alt="bitcoin Fear and Greed Index” width=”860″ height=”413″ srcset=”https://www.newsbtc.com/wp-content/uploads/2024/04/chart.png?w=1101 1101w, https://www.newsbtc.com/wp-content/uploads/2024/04/chart.png?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/04/chart.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/04/1712179269_681_Bitcoin-Traders-No-Longer-Extremely-Greed-–-Sign-of-Bounce.png 860w, https://www.newsbtc.com/wp-content/uploads/2024/04/chart.png?w=750 750w” sizes=”(max-width: 860px) 100vw, 860px” data-recalc-dims=”1″/>
The value of the indicator seems to have registered a plunge recently | Source: crypto/fear-and-greed-index/" target="_blank" rel="nofollow">Alternative
In addition to the three core feelings, there are also two “extreme” feelings: extreme greed and extreme fear. The first occurs at values above 75, while the second occurs below 25.
The bitcoin Fear & Greed index yesterday was 79, implying that the market had been extremely greedy. The indicator has been regularly within this zone for the last month, so the current normal greed values go against the trend.
Naturally, sentiment among investors has been so high recently because the btc price has seen a strong rally in this period and explored new all-time highs (ATHs).
Historically, the price of bitcoin has tended to go against the expectations of the majority. And the stronger this expectation has been, the more likely it will be that a countermeasure will occur.
For this reason, extreme sentiments have been where reversals were most likely to occur in the asset in the past. For example, the current ATH of the asset was formed when the index had a value of 88.
With the recent drop in prices, sentiment has also taken a hit. However, the fact that it has fallen from the zone of extreme greed may favor the formation of a bottom. The previous low, around March 20, was also formed when the index broke out of the zone.
The current level of the bitcoin Fear & Greed Index is not only lower than then, but also the lowest since February 11, when the asset was still trading around $48,000.
btc Price
bitcoin is now down to the $65,800 level after facing a drop of over 7% in the past few days.
x/G7X0rCHc/” alt=”bitcoin price chart” width=”1534″ height=”854″/>
Looks like the price of the asset has plunged to lows recently | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, Alternative.me, TradingView.com chart
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
