Bitcoin Extreme Greed Is Nearly Here: Will This Lead To A Top?
October 16 2024 - 7:00PM
NEWSBTC
Data shows the Bitcoin market sentiment has nearly turned to
extreme greed as the cryptocurrency’s price has rallied to the
$68,000 mark. Bitcoin Fear & Greed Index Is Currently Inside
The Greed Region The “Fear & Greed Index” is an indicator
created by Alternative that tells us about the average sentiment
present among traders in the Bitcoin and wider cryptocurrency
markets. This index makes use of the data of the following five
factors in order to determine the sentiment: trading volume,
volatility, social media sentiment, market cap dominance, and
Google Trends. Once found, it represents the market mentality as a
score between 0 and 100. When the metric has a value greater than
53, it means the traders as a whole share a sentiment of greed
right now. On the other hand, it being under the 47 mark implies
the dominance of fear in the market. The territory in-between these
two corresponds to a net neutral mentality. Related Reading:
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More Volatility? Besides these three main sentiment zones, there
are also two special regions called the extreme fear and the
extreme greed. The former of these occurs at 25 and under, while
the latter at 75 and above. Now, here is what the latest value of
the Bitcoin Fear & Greed Index has been like: As is visible
above, the indicator has a value of 73, which suggests that the
investors are currently showing a significant amount of greed. This
is a notable change from how the mood in the market was last week,
as the index had declined into the fear zone then. The below chart
shows how the value of the Bitcoin Fear & Greed Index has
changed over the past year: From the graph, it’s visible that this
latest uplift in the sentiment, which has come as a result of the
asset’s rally to $68,000, has taken the index to the highest value
since the end of July. Back then, the high sentiment values had led
to a top for the cryptocurrency. This type of pattern is something
that has actually been witnessed throughout history. It turns out
that Bitcoin has a tendency to move in the direction opposite to
what the crowd is expecting and the probability of such a contrary
move increases the more the traders lean towards one side. In the
extreme regions, this likelihood is the strongest, so tops and
bottoms have often formed when the investors have shared these
sentiments. The current value of the index is just outside the
extreme greed zone, so a top could become likely for the asset
should the investor mentality continue to improve. Related Reading:
Bitcoin Analyst Reveals Best On-Chain Metric For ‘Day-To-Day
Trading’ The sentiment may also not even have to improve further
for such a scenario to follow out, as the top back in July had
occurred when the index had a value of 74, only one unit greater
than the current one. BTC Price At the time of writing, Bitcoin is
trading at around $68,000, up more than 9% over the last week.
Featured image from Dall-E, Alternative.me, chart from
TradingView.com
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