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bitcoin price has broken back above the $100,000 level after three consecutive days of price increases. Notably, bitcoin's performance above $100,000 is due to a 12.5% rise after it bounced off the $90,000 support level on Monday, January 13.
Unsurprisingly, this positive momentum with bitcoin has spread to other cryptocurrencies. Major altcoins have mirrored the rise of bitcoin, contributing to a notable increase in the overall cryptocurrency market capitalization. A byproduct of this rise in cryptocurrency market capitalization has been a simultaneous move in the crypto Fear and Greed index, which is now <a target="_blank" href="https://bitcoinist.com/bitcoin-extreme-greed-returns-btc-reclaims-990000/” rel=”nofollow”>moving towards the threshold of extreme greed.
Fear and Greed Index Moves Towards Extreme Greed
He <a target="_blank" href="https://alternative.me/crypto/fear-and-greed-index/” rel=”nofollow”>crypto Fear and Greed Index is a popular index that measures market sentiment on a scale from 0 to 100. The scale is graded from the low end of extreme fear to the high end of extreme greed and a neutral zone in between. Periods of extreme fear are <a target="_blank" href="https://bitcoinist.com/bitcoin-sentiment-cools-greed-index-sinks-amid-price-dip/” rel=”nofollow”>characterized by oversold conditions and bearish market sentiment, which often presents purchasing opportunities.
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On the other hand, when greed dominates, it often indicates overbought conditions. It also opens up the possibility that a correction or crash is near, especially if there is a rapid shift from neutral to extreme greed.
The entire cryptocurrency market capitalization has witnessed steady inflows this week. Data from CoinMarketCap shows that the total cryptocurrency market capitalization started the week around $3.14 trillion. This figure has risen to $3.57 trillion at the time of writing, representing an influx of around $430 billion in the past five days. This 13.5% jump points to further optimism as bitcoin and some major altcoins now look to return to new highs.
These recent entries into the cryptocurrency market have seen the index move from a neutral threshold at the start of the week to a greed threshold at the time of writing. What is particularly surprising is the speed at which sentiment has changed. For now, the index is approaching the threshold of extreme greed, an area that suggests the market could be entering overbought territory.
Where will bitcoin price go from here?
The market's ability to stay the course and maintain a sense of greed depends on <a target="_blank" href="https://bitcoinist.com/bitcoin-price-remains-bullish/” rel=”nofollow”>bitcoin's ability to maintain a price above $100,000, given its dominant position in the market. If the bulls manage to defend the $100,000 mark and establish it as a solid support level, this could mitigate the risk of extreme greed leading to overbought conditions and a subsequent downward correction.
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TO support above $100,000 Basically, it would reset the crypto Fear And Greed index around this level. Failure to stay above $100,000 could validate the historical trend that a feeling of extreme greed often leads to a crash.
At the time of writing, bitcoin is trading at $101,420 and is up 1.6% in the last 24 hours.
Featured image created with Dall.E, chart from Tradingview.com
