After three months of fearful market, Bitcoin sentiment is turning greedy again
Data shows that the Bitcoin market has turned greedy again after nearly three months of investor fears.
Bitcoin Market Gets Greedy Again After Nearly Three Months of Fear
The relevant indicator here is the ‘Fear and Greed Index’, which tells us what general investor sentiment is at the moment.
The metric uses a numerical scale ranging from zero to one hundred to reflect this sentiment. All values below fifty fall into the ‘fear’ category, while those above that belong to ‘greed’.
When the index shows extreme values of above 75 and below 25, the market sentiment is extreme greed and extreme fear, respectively.
Some investors prefer to sell when the market is extremely greedy as highs have formed during such periods in the past. Likewise, they also think that buying during extreme anxiety is better, because bottoms usually occur then.
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There is a famous quote from Warren Buffet that resonates with this philosophy: “Be afraid when others are greedy, and greedy when others are afraid.”
Here’s a chart from this week mysterious investigation report showing the trend in the Bitcoin fear and greed index over the past year:
The value of the indicator seems to have risen sharply lately | Source: Arcane Research Weekly Update – Week 5
As you can see in the chart above, when the report came out yesterday, market sentiment had almost left the fear zone as the indicator showed a reading of 48.
Since November, the market has been quite anxious, often sunk in extreme fear. But recently, the stat has seen a sharp upward trend, and today investor sentiment is finally back to greed for the first time in three months, as the index’s value now hovers around 54.
Bitcoin’s Fear and Greed Index Has Now Passed 50 | Source: alternative.me
Market sentiment turning to that of greed may turn out to be bullish for the price of Bitcoin as such sentiment usually occurs during bull rallies.
Related literature | Bitcoin Taker Buy/Sell Ratio Shows “Buy” Signal As BTC Takes Off
At the time of writing, Bitcoin’s price is hovering around $43.5k, up 13% over the past seven days. Over the past month, the crypto has gained 5% in value.
The chart below shows the trend in the price of BTC over the past five days.
The price of BTC seems to have risen in recent days | Source: BTCUSD on TradingView
Bitcoin has been on a sharp upward trend in recent weeks. Yesterday, the price of the crypto briefly broke past $45k, but it didn’t take long for the coin to bounce back to current levels.
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research