As a seasoned researcher who has witnessed numerous market cycles, I can’t help but feel a sense of déjà vu when looking at the current sentiment data and Bitcoin price action. The Fear & Greed Index hovering around extreme greed territory is a familiar sight during bull runs, reminding me of the old adage, “Buy the rumor, sell the news.
Data shows that the sentiment of Bitcoin has cooled off from extreme greed as bearish price action continues for BTC and other cryptocurrencies.
Bitcoin Fear & Greed Index Is Now Pointing At ‘Greed’
The “Fear & Greed Index,” developed by Alternative, offers insights into the general emotional state of investors within the Bitcoin and broader crypto market, reflecting their overall sentiment.
In simpler terms, this measurement employs a scale from zero to one hundred to express investor sentiment. Values greater than 53 reflect an overall sentiment of greed among investors, whereas figures below 47 suggest a prevailing fear in the market. Sentiment hovering between these two thresholds signifies a neutral stance.
Now, here is what the Bitcoin Fear & Greed Index says regarding the current market sentiment:
From what you can see up there, the indicator reads 74, signifying that investors are currently feeling quite greedy. This high value also happens to be exceptionally deep within the specified range, reaching all the way to the border of a unique area known as the “extreme greed zone.
Whenever the index surpasses the 75 threshold, the market exhibits intense optimism or exuberance. Conversely, when the index falls below 25, there’s a corresponding state of significant concern or panic, often referred to as ‘extreme fear’.
Strong feelings, particularly extremes, have traditionally played a crucial role in the trajectory of Bitcoin and other digital currencies. Notably, significant peaks and troughs have often occurred during these emotionally charged periods.
As a researcher studying market trends, I’ve observed an inverse correlation between sentiment and price. This means that when there’s excessive optimism or ‘greed,’ we often see market peaks. On the flip side, deep-seated ‘fear’ tends to indicate potential market bottoms.
Over the last phase of the stock market surge, the index often found itself within the highly optimistic “extreme greed” area. Yesterday, this measurement still fell under that category.
The shift in mood is occurring now as Bitcoin (BTC) experiences a decline and the altcoin market endures a collapse. Based on past trends, this recent cooling down of investor enthusiasm might actually prove beneficial, possibly paving the way for the rally to carry on.
Recently, it’s been noted by CryptoQuant founder and CEO Ki Young Ju in a post that the projected relationship between Bitcoin (BTC) and Tether (USDT) (represented by the BTC-USDT pair) has seen a drop in its value.
The Estimated Leverage Ratio measures the average amount of leverage that the futures market users are opting for. The fact that this metric has registered a drawdown recently could be constructive for Bitcoin, as it means there is lower risk of a chaotic mass liquidation event happening.
BTC Price
Yesterday, Bitcoin plunged to a level below $94,300, but remarkably, it’s bounced back swiftly, with its current price standing at around $98,500.
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2024-12-12 10:41