Time to be scared? Bitcoin Index Hits Most Greedy Point Since Peak
Data shows that the Bitcoin fear and greed index has now reached its highest level since its peak in November, as the price of the cryptocurrency soars.
Bitcoin Fear and Greed Index Now Points to “Greed”
According to the latest weekly report from mysterious investigationBTC’s fear and greed index has risen to values of greed sentiment this week.
The “Fear and Greed Index” is an indicator that tells us about the current general market sentiment among Bitcoin investors.
The metric uses a numerical scale ranging from one to one hundred to represent this feeling. Any reading above fifty indicates that investors are greedy right now. While those below the line suggest a fearful market.
Values above 75 and below 25, that is, the values at the ends of the range, represent extreme greed and extreme fear, respectively.
Here’s a chart showing the trend in the Bitcoin Fear and Greed Index over the past year:
It seems that the value of the indicator has recently increased | Source: Arcane Research Weekly Update – Week 12, 2022
As you can see in the chart above, the Bitcoin fear and greed index has risen sharply over the past week. The indicator now has a reading of 56, indicating that the market is getting greedy.
This value of the statistic is now more than at any other period in the year 2022 and is the highest since its peak in early November last year.
Related literature | Glassnode’s RHODL Ratio May Suggest Bitcoin Market Is Near Capitulation
Historically, Bitcoin spikes have tended to happen while sentiment is that of extreme greed, and bottoms have formed during periods of extreme fear.
There is a popular trading technique called “reverse investing” that takes advantage of this fact. Traders who follow this method believe that the best time to buy is during extreme fear, while extreme greed is the time to sell.
Related literature | Weekly Bitcoin momentum turns bullish for the first time in 2022: what data says
This famous Warren Buffet quote sums up this philosophy: “Be afraid when others are greedy, and greedy when others are afraid.”
So, in line with the thinking of contrarian investors, the current market sentiment that is turning greedy may be a sign that you need to get scared now.
At the time of writing, Bitcoin’s price is hovering around $47.3k, up 12% over the past seven days. Over the past month, the crypto has gained 26% in value.
The chart below shows the trend in the price of the coin over the past five days.
Bitcoin price seems to have risen in recent days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research