Extreme Greed Is Back For Bitcoin, Is It Time To Sell?
13 Février 2024 - 5:30PM
NEWSBTC
Data shows extreme greed sentiment has made a return among the
Bitcoin investors after the cryptocurrency’s price has broken above
$50,000. Bitcoin Fear & Greed Index Now Points Towards “Extreme
Greed” The “Fear & Greed Index” refers to an indicator that
tells us about the general sentiment among Bitcoin traders and
broader cryptocurrency sectors. The metric represents this
sentiment using a numerical scale from zero to hundred. According
to Alternative, its creator, the index calculates this score using
five factors: volatility, trading volume, social media sentiment,
market cap dominance, and Google Trends. Related Reading:
CryptoQuant Founder Puts $112,000 Target For Bitcoin This Year When
the Fear & Greed Index has a value of 54 or greater, the
investors now share a sentiment of greed. On the other hand, values
of 46 or less imply the presence of fear among the traders. The
region between these two ranges (values 47 to 53) corresponds to
the territory of “neutral” sentiment. In addition to these three
core sentiments, “extreme fear” and “extreme greed” occur at the
deep ends of the fear and greed ranges. Here is what the Bitcoin
Fear & Greed index looks like right now to see which of these
regions the market is in: Looks like the value of the metric is 79
at the moment | Source: Alternative As displayed above, the Bitcoin
Fear & Greed Index has surpassed the 75 threshold for extreme
greed during the past day and has attained a value of 79. The
metric was at 70 yesterday, so it has seen a bit of a jump in just
the last 24 hours. This surge in sentiment from greed to extreme
greed has occurred as cryptocurrency broke past the $50,000
barrier for the first time since December 2021. Historically, the
extreme sentiments have been quite significant for the asset, as
major bottoms and tops for the price have occurred in these
regions. This relationship between the two, however, has been
inverse. Extreme fear has been when bottoms have taken shape, while
extreme greed has been where tops have formed. In the past, Bitcoin
has usually tended to move against the majority’s expectations.
This expectation is the strongest in these ranges, so it makes
sense that a reversal is the primarily likely here. Followers of a
trading philosophy called “contrarian investing” exploit this fact
to time their buying and selling moves. “Be fearful when others are
greedy, and greedy when others are fearful” is a famous quote from
Warren Buffet that sums up the idea. As the chart below shows, the
last time the Fear & Greed Index attained extreme greed levels
was around the time of the spot ETF approval. The trend in the Fear
& Greed Index over the past year | Source: Alternative As BTC
investors are very well aware, the coin hit a top coinciding with
the event as the market took to selling the news. Since the
sentiment is now back inside extreme greed with its latest surge,
another similar reversal point may be close for its price. Related
Reading: Dogecoin Out Of Fashion? Volume & Whale Activity
Plunges Perhaps it’s at a time like this when a contrarian investor
would consider moving towards selling, going against the hype and
euphoria floating around the market. BTC Price Bitcoin has enjoyed
a surge of over 4% in the past day, which has taken its price
towards the $50,000 mark. The price of the coin appears to have
shot up over the past day | Source: BTCUSD on TradingView Featured
image from Shutterstock.com, Alternative.me, charts from
TradingView.com
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