Data shows the sentiment in the Bitcoin and the wider cryptocurrency market has turned back to greed as BTC’s price has broken $29,000.
Bitcoin Fear & Greed Index Is Now Pointing At “Greed”
The “Fear & Greed Index” is an indicator that tells us about the general sentiment among the investors in the Bitcoin and wider cryptocurrency sector. The metric uses a numeric scale that runs from 0-100 for representing this sentiment.
All values of the index below the 50 mark imply that the investors are fearful right now, while those above this threshold suggest that the market is greedy currently. While this cutoff may be clean in theory, the region between the values of 46 and 54 (that is, the boundary of the two sentiments) is considered to signify a neutral sentiment.
There are also two “extreme” sentiments, called extreme fear and extreme greed, which take place at values less than 25 and more than 75, respectively. These mentalities have held historical importance for the market, as cyclical bottoms have formed in the former region, while tops have taken shape in the latter one.
Because of this reason, some investors believe it’s ideal to buy during extreme fear, while extreme greed presents the best-selling opportunities. Followers of this philosophy are called “contrarian traders.” Warren Buffet’s popular quote nicely encapsulates the same idea: “Be fearful when others are greedy, and greedy when others are fearful.”
Now, here is how the fear and greed index currently looks like for the Bitcoin and general cryptocurrency market:
The sentiment among investors in the market right now | Source: Alternative
As you can see above, the Fear & Greed Index has a value of 56 currently, which means that the investors in the market as a whole are greedy at the moment. Just yesterday, the mentality in the sector was different, however, as the holders shared a neutral sentiment.
The below chart shows how the indicator’s value has changed recently.
The value of the metric seems to have declined recently | Source: Alternative
From the chart, it’s visible that the Bitcoin Fear & Greed Index had been stuck in the fear and extreme fear zones during the 2022 bear market, but with the rally this year, the sentiment was able to return to neutral and greed values.
Between the 18th of March and the 19th of April, the indicator had maintained relatively high greed values, but the recent plunge in the price from above $30,000 to the low $27,000 levels naturally resulted in the market mentality also taking a hit.
In the days that followed, the investors assumed a neutral sentiment (except for a brief spike to greed on the 23rd). With the price’s surge to above $29,000 in the past 24 hours, however, the indicator has once again recovered back to greed values.
It’s currently unclear whether the Bitcoin market can keep up this newfound momentum, or if it’s only a temporary uplift. At the very least, the general investor sentiment suggests that they are supportive of the increase.
At the time of writing, Bitcoin is trading around $29,900, up 1% in the last week.
BTC has sharply surged in the past day | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, Alternative.me