Bitcoin Mood Shift: From Greed To Grounded

The data indicates a shift in Bitcoin market sentiment, moving away from the realm of extreme greed. This change could potentially open the door for the continuation of the rally. The Fear & Greed Index, developed by Alternative, gauges the overall sentiment prevailing among traders in both the Bitcoin and broader cryptocurrency market.

The index uses the following five factors—volatility, trading volume, sentiment on social media, market cap dominance, and Google Trends—to determine this average sentiment. The indicator uses a numerical scale with a range of zero to hundred to represent the sentiment. Values on this scale that are less than 47 indicate that investors are fearful, while values that are more than 53 indicate that there is market greed.

The range from 47 to 53 inherently represents the zone of “neutral sentiment.” Apart from these central areas, there exist two intense emotions known as extreme fear and extreme greed, manifesting at the extremes of the fear and greed spectrums (below 25 and above 75, respectively).

Currently, let’s examine the present state of the Bitcoin Fear & Greed Index to determine the prevailing market sentiment and identify the corresponding territory.

Bitcoin Sentiment Shift: Greed Grows

However, Displayed above is the current Bitcoin Fear & Greed Index, registering at 72. This indicates a sentiment leaning towards greed, though not yet reaching the extreme greed level. It’s noteworthy that this represents a recent shift, as the sentiment had previously spiked into the extreme greed territory. The following chart illustrates the fluctuations in the metric’s value over the past year.

The surge in market sentiment accompanies the cryptocurrency’s recent rally, reaching a current price of over $51,000. Yet, it’s worth noting that historically, instances of entering extreme greed have served as bearish indicators for the asset.

This phenomenon occurs because Bitcoin typically exhibits movements that defy popular expectations. The likelihood of such a contrarian shift increases as prevailing expectations become more pronounced. This tendency is particularly robust in areas characterized by extreme sentiments.

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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

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