Data shows the Bitcoin trader sentiment has been teetering on the edge of extreme greed for the last few days, a sign that a break may be coming.
Bitcoin Fear & Greed Index Is Sitting On The Boundary Of Extreme Greed
The “Fear & Greed Index” refers to an indicator created by Alternative that tells us about the average sentiment present among investors in the Bitcoin and wider cryptocurrency markets.
The index uses a numerical scale running from zero to hundred for representing the market sentiment. All values above 53 correspond to greed among the investors, while those below 47 suggest the presence of fear. The in-between levels naturally correspond to a net neutral mentality.
Now, here is how the current market sentiment looks, according to the Fear & Greed Index:
The value of the metric appears to be 74 at the moment | Source: Alternative
As is visible above, the indicator currently has a value of 74, which implies the investors as a whole share a sentiment of greed and a strong one at that, considering the high value.
In fact, this value is so high that it’s right on the gateway to a special zone called the extreme greed. This region, which is situated beyond the 75 level, corresponds to euphoria among the Bitcoin traders. There is a similar territory on the other end of the scale as well, known as extreme fear (under 25). When the index is in this zone, it naturally suggests the investors are in the deepest state of despair.
Historically, both of these zones have held much significance for Bitcoin and other digital assets, as major reversals have occurred when the investors have held these mentalities. Thus, extreme greed can lead to a top and extreme fear to a bottom.
Recently, Bitcoin has climbed to price levels near the all-time high, so it’s not surprising that the sentiment is heating up. Still, for now, the index hasn’t broken into the extreme greed zone yet, so it’s possible that the run could have more room to run before overhype becomes an issue.
It only remains to be seen how long this would hold, however, considering that the Fear & Greed Index has been sitting on this boundary level for three straight days now.
The trend in the Fear & Greed Index over the past twelve months | Source: Alternative
Any continuations to the rally could take the market sentiment beyond the extreme greed threshold, at which point a reversal could become more likely, the higher the index ventures into the zone.
In some other news, Bitcoin’s 30-day correlation with Gold has recently declined to its lowest level since February, as the analytics firm Glassnode has pointed out in an X post.
Looks like BTC's correlation to Gold is negative on the monthly timeframe | Source: Glassnode on X
At present, the 30-day correlation between Bitcoin and Gold is sitting at a value of -0.54, which means that over the past month, the two have traveled oppositely to each other to some degree.
BTC Price
Bitcoin saw a sharp burst to the $107,000 level yesterday, but the coin has since fallen off just as rapidly, as its price is now floating around $102,300.
The price of the coin has been moving sideways in the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, Alternative.me, chart from TradingView.com
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