The fear and greed index displays a current value of „extreme greed“.
This shift in market sentiment follows weeks of price hikes that took Bitcoin’s price to nearly $ 16,000.
Uncontrolled optimism in the market may indicate that a local top is near.
An important measure of market sentiment for Bitcoin and cryptocurrency, known as the Fear and Greed Index, now displays a value of “Extreme Greed”. This apparent change in sentiment follows several weeks of steady gains in the BTC price.
Bitcoin’s price practically hit $ 16,000 on the morning of Friday, November 6. The return of such widespread optimism may indicate that a local top is near.
The return of “extreme greed”
The recent price rise has inspired renewed confidence in the Bitcoin market. The popular fear and greed index now measures extreme greed.
The fear and greed index is now at 90. We can now peak at any time!
The indicator’s current value, 90, is the highest for more than 12 months. The last time „extreme greed“ took hold of the market was the sharp rise in 2019 which pushed the price up to $ 13,000.
The index also approached extreme greed levels in August of this year. However, just last month the market fell into a state of “Fear”.
The indicator provides a form of measurement of general market sentiment. It takes into account volatility, market dynamism, social media sentiment, surveys, and Bitcoin’s dominance relative to the rest of the market to produce a score out of 100.
This score is then represented as a reading of “extreme fear”, “fear”, “neutrality”, “greed” or “extreme greed”. The indicator is inspired by the famous quote from Warren Buffet: “Be fearful when others are greedy, and greedy when others are fearful”.
Bitcoin is close to $ 16,000
Recent Bitcoin price action is behind the reading of the Extreme Greed Indicator. Since the start of October, the leading digital currency has gained around $ 5,000 in value. BTC is now trading at around $ 15,500 and is at levels not seen for almost three years.
The price was influenced by a mix of positive developments and lingering uncertainties in other markets. As for the macroeconomic outlook, stimulus efforts against COVID-19 and the US presidential election have prompted investors to seek a safe place to park value.
In what has become a new trend, large publicly traded companies are starting to invest liquidity reserves in Bitcoin. Companies like MicroStrategy , Square and others have announced significant positions in digital currency to protect against uncertain macroeconomic conditions.
Are we approaching a summit?
As pointed out market analyst The Moon (@TheMoonCarl) above, the return playing extreme greed could indicate a local peak of the course. The quote from Buffett that inspired the indicator itself warns that overconfidence in a market often precedes a correction.
During the bullish price of 2019, the Fear and Greed Index peaked at 95 on June 26. The next day, according to CoinGecko, the price hit $ 12,996 before starting a multi-month correction, reaching its lowest point in late December at around $ 6,600.
That said, there is nothing to suggest that the coming correction will be as drastic as that of 2019. Truth be told, many traders say that the price action that led to this sharp rise is fundamentally stronger than it was in 2019. was last year.
In recent videos, YouTuber and technical analyst Tone Vays called for a price pullback. Such corrections are important during periods of prolonged price increases because they create support points, which can lead to stronger movements afterwards.