Bitcoin Flies Above $47,300, But Watch Out For Extreme Greed
09 Februar 2024 - 6:00PM
NEWSBTC
Bitcoin is finally showing a sustained bullish push as it has now
broken above $47,300, but overly positive sentiment can be an
obstacle to this rally. Bitcoin Fear & Greed Index Suggests
Market Is Nearing Extreme 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. According
to Alternative, its creator, the index takes into account five
factors to calculate this sentiment. These are volatility, market
volume, social media sentiment, market cap dominance, and Google
Trends. The index outputs the sentiment as a number lying between
zero to hundred. Related Reading: Ethereum Breaks Above $2,400:
This Metric Points To Further Upside All values of 46 and under
imply the investors are fearful, while those of 54 or over suggest
the presence of greed in the market. The region between 47 and 53
corresponds to the region of neutral sentiment. Now, here is what
the Fear & Greed Index looks like for Bitcoin right now to see
which of these regions the market stands in at present: The current
value of the sentiment according to this index | Source:
Alternative As is visible above, the Bitcoin Fear & Greed Index
has a value of 72 at the moment, implying that the majority of the
investors in the space share a greedy mentality. Besides the three
core sentiments mentioned earlier, there are also two extreme ones:
the extreme fear and extreme greed. The former of these occurs at
values of 25 and under, while the latter takes place at 75 and
above. Historically, these two sentiments, in particular, have held
great significance for the cryptocurrency’s trajectory. Generally,
at any point, the asset is more likely to move against the
expectations of the majority, and in these extreme regions, this
expectation becomes the strongest. As such, these sentiments have
been where major reversals in the asset have been the most likely
to occur. Followers of a trading philosophy called “contrarian
investing” exploit this fact to time their buying and selling
moves. Warren Buffet‘s famous quote sums up the idea, “Be fearful
when others are greedy, and greedy when others are fearful.” At a
value of 72, the Bitcoin market is quite close to entering into the
extreme greed region right now. Just yesterday, the metric had a
value of 66, which means there has been some jump in just the past
24 hours. Looks like the value of the metric has shot up over the
past day | Source: Alternative This increase in the index has
naturally come because of the bullish momentum that the asset has
enjoyed in the past day. Any further improvements in sentiment,
however, may be alarming, as the metric would then enter into the
extreme greed territory. The last time that the Bitcoin Fear &
Greed Index surged into extreme greed values was around the time of
the approval of the spot exchange-traded funds (ETFs). As it
happened, the coin hit its top, coinciding with this overly bullish
mentality. Related Reading: Analyst Reveals Potential Trigger For A
32% Cardano (ADA) Rally Thus, if this precedence is anything to go
by, any visit into the territory in the coming days may serve as a
warning that a top is near for the cryptocurrency. BTC Price
Bitcoin has enjoyed an uplift of over 6% during the past 24 hours
as its price has cleared the $47,300 level. The price of the coin
appears to have been going up over the last couple of days |
Source: BTCUSD on TradingView Featured image from Michael Förtsch
on Unsplash.com, charts from TradingView.com, Alternative.me
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