Bitcoin Sentiment Remains Near Extreme Greed, Potential Cooldown Required
Data indicates that Bitcoin market sentiment remains close to the extreme greed zone, suggesting a potential need for price cooling before reaching a bottom.
Bitcoin Fear & Greed Index Indicates High Greed Value
The Fear & Greed Index, created by Alternative, measures average investor sentiment in Bitcoin and the broader cryptocurrency markets. The index ranges from zero to one hundred. Values above 53 indicate greed, while those below 47 suggest fear. Values between these thresholds represent a neutral sentiment.
Current sector sentiment according to the Bitcoin Fear & Greed Index:
The index currently stands at 73, indicating strong greed among traders, nearing the extreme greed threshold of 75 or higher. Conversely, extreme fear occurs at values of 25 or below. Historically, these extreme sentiments correlate with significant price movements in Bitcoin and other cryptocurrencies, often marking tops and bottoms.
Typically, an inverse relationship exists between price and sentiment: extreme greed often leads to price tops, while extreme fear can result in bottoms. The recent BTC peak occurred when the index reached 87.
Although market sentiment has cooled following the recent price decline, it may not have cooled sufficiently. While traditional market cycles often require dips into fear or extreme fear for bottoms, bull markets typically do not experience such deep pullbacks. A transition into the normal greed zone or neutral territory may suffice for price recovery, but current sentiment is still near extreme greed, indicating a possible need for further adjustment.
The Fear & Greed Index incorporates various factors, including social media sentiment. Despite overall positive sentiment, social media users are beginning to show signs of fear, as noted by analytics firm Santiment in an X post.
BTC Price
Bitcoin experienced a 6% rebound over the last 24 hours, potentially indicating that the dip into greed sentiment was sufficient for a rally to resume.
