Bitcoin Investors Beware: Extreme Greed Has Returned In Crypto
07 Junio 2024 - 2:00PM
NEWSBTC
Data shows that cryptocurrency investors’ sentiment has surged to
extreme greed recently, a sign that may not be ideal for Bitcoin.
Bitcoin Fear & Greed Index Is In The Extreme Greed Territory
Right Now The “Fear & Greed Index” is an indicator created by
Alternative that keeps track of the average sentiment present among
the traders in the Bitcoin and wider cryptocurrency market. The
index represents this sentiment as a number between zero and 100.
To calculate the score, the metric takes into account five factors:
volatility, trading volume, social media sentiment, market cap
dominance, and Google Trends. Related Reading: Shiba Inu, Cardano
Seeing Explosive Whale Activity, Santiment Reveals When the Fear
& Greed Index has a value greater than 54, the investors are
greedy. On the other hand, values under 46 imply that the market is
fearful currently. The region between these two cutoffs signifies
the territory of a neutral mentality. In addition to these three
core sentiments, the index has two special zones: “extreme greed”
and “extreme fear.” The former occurs when the metric surpasses 75,
while the latter occurs at levels under 25. Now, here is what the
sentiment in the Bitcoin market looks like right now based on the
Fear & Greed Index: As is visible above, the Bitcoin Fear &
Greed Index has a value of 77 at the moment, which suggests that
investors as a whole feel extreme greed. The current value means,
however, that the market is only just inside this territory.
Earlier, the indicator had a lower value, but the latest price
surge beyond the $71,000 level has meant that investors have openly
jumped on the bull bandwagon. Below is a chart showing how the
sector’s sentiment has changed over the past year. The graph shows
that the latest values of the Fear & Greed Index are the
highest that the cryptocurrency has witnessed since the first half
of April. Between then and now, the only other time the indicator
stepped inside the extreme greed zone was during a stretch in May.
During this phase, 76 was the highest the metric could go, which is
right at the region’s boundary. Historically, the price of Bitcoin
has tended to go against the majority’s expectations, and the
stronger this expectation has become, the more likely it is that
such a contrary move will occur. Related Reading: Bitcoin Surges
Past $71,000, But TD Sequential Says ‘Sell’ Since the extreme
sentiment zones are where the market turns the most lopsided,
reversals are probable. Naturally, extreme fear is where bottoms
happen, while extreme greed can lead to tops. As such, the latest
breach into the extreme greed territory could perhaps be bad news
for the recovery rally. It should be noted, though, that the
current level of the indicator may still not be too high compared
to past bull run levels. For example, the rally to the new all-time
high price in March saw the indicator peak at 90. BTC Price So
far in its recovery run, Bitcoin has risen towards the $71,500
level. Featured image from Dall-E, Alternative.me, chart from
TradingView.com
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