Bitcoin Pushes Into Extreme Greed, What You Should Expect From Here
06 Dezembro 2023 - 6:00PM
NEWSBTC
The Bitcoin positive sentiment has been rising rather rapidly in
the last few months as the market has staged an incredible
recovery. This saw the Bitcoin Fear & Greed Index go from deep
fear to deep greed and that greed just continued to grow. Now, the
sentiment is on the brink of extreme greed, which can be good in
the short term, but could inherently turn bearish for the price.
How The Fear & Greed Index Works The Bitcoin Fear & Greed
Index uses a number scale of 1-100 to identify how investors are
feeling toward the crypto market at any given time. This index uses
a number of different indicators to come up with a number which
ranges from social media posts to market volatility and momentum,
among others. Related Reading: Bitcoin Bull Rally Is Far From Over
According To These Large Whales The scale is then divided into five
distinct categories depending on how investors are feeling and the
number that the index is on. 1-25 is considered to be extreme fear
and is a time when crypto investors tend to stay away from the
market due to price drops. However, this has often proven to be the
best time to buy cryptocurrencies. Next is the 26-46 range which is
known as the fear territory. It is one step ahead of extreme fear
but is also a time when investors are not as wary despite the
rampant fear. It is also a good time to buy and precede the next
stage, which is neutral. Neutral is the region between 47-52 and
signifies a time when investors are unsure of this market. Mainly,
investors refrain from making any moves during this time, waiting
for the market to swing either up or down before deciding their
next move. One step above this is the greed level starting at 53
and ending at 75. At this time, investors are returning to the
market and prices are recovering rapidly. This often ends up in
extreme greed between 76 and 100, where major decisions are being
made. BTC price reclaims $44,000 | Source: BTCUSD on
Tradingview.com Bitcoin Sentiment Rests At 72 The Fear & Greed
Index is currently at 72, treacherously close to slipping into the
extreme greed territory which could have massive implications for
the price. Now, looking back at times when the index’s score has
gone this high, it paints a picture of bullishness followed by
bearishness. Related Reading: The Bulls Are Back: Crypto
Institutional Inflows Balloon To 2021 Levels An example of this is
in December 2020 when the index rose into the extreme greed
territory. It would continue to rise as investors trooped into the
market, eventually topping out at 91. Then what followed was a
crash that sent investors spiraling. The same thing happened
between October and November 2021 where the score reached extreme
greed before crashing. Source: alternative.me Given how the Bitcoin
price has performed whenever the score was this high, it stands to
reason that extreme greed can often act as a top signal. So the
index going into the 76-100 region can often signify that it is
time to exit the market. If this trend does repeat, then the
Bitcoin price could run further and mount more recovery. However,
it is headed toward a market crash that could trap bulls who have
not timed their exit correctly. Featured image from Trade Santa,
chart from Tradingview.com
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