Bitcoin Investors Are Getting Greedy Again: What’s Next for BTC?

Data shows Bitcoin investors have become greedy again after BTC surged to $64,000. Here’s what it could mean.

Bitcoin Fear & Greed Index Now Points to ‘Greed’

The “Fear & Greed Index” is an indicator developed by Alternative that tells us about the current sentiment among investors in Bitcoin and other major cryptocurrencies.

This metric uses data from five factors to determine net market sentiment: volatility, trading volume, social media sentiment, market cap dominance, and Google Trends.

The index uses a scale of zero to 100 to represent this sentiment. Any reading above the 53 mark corresponds to the presence of greed among investors, while those below 47 imply fear in the market. Of course, readings between these two cutoffs suggest a net-neutral mentality.

This is what the Bitcoin Fear & Greed Index looks like right now:

The value of the metric appears to be 55 at the moment | Source: Alternative

As seen above, the indicator has a value of 55, which means that the investors are currently just sharing a sense of greed. This greedy mentality is a new change for the market compared to the recent trend.

The chart below shows how the value of the index has changed over the past year.

Looks like the value of the indicator has shot up in recent days | Source: Alternative

The chart shows that the Bitcoin Fear & Greed Index was still relatively low last week. More specifically, the indicator was deep in the fear region and quite close to a special zone called extreme fear.

Extreme fear occurs when the index registers a value of 25 or lower. The metric has visited this area several times over the past month, with perhaps the most notable example being the low that occurred next to the price bottom on August 5th.

Historically, we have seen many examples of this pattern in Bitcoin, where dips into the extreme fear zone led to a bottom for the cryptocurrency’s price.

A similar but opposite pattern has also been observed for the extreme greed zone, which starts at 75 on the Fear & Greed Index. The all-time high (ATH) earlier this year was also formed when sentiment in this area peaked.

So it seems that Bitcoin tends to move in the opposite direction of what the masses expect. The extreme sentiments represent the periods where this expectation is strongest, so it makes sense that a reversal is also most likely during these periods.

With sentiment recently improving from fear to greed, investors have become more optimistic. Since the hype is still mild, Bitcoin should not experience any negative effects.

The index is worth watching in the coming days as any spikes in extreme greed could be a warning that things are getting too hot for this asset.

BTC price

Bitcoin rose to $65,000 yesterday, but since then the asset’s value appears to have fallen to $63,600.

The price of the coin appears to have gone stale after its recent rally | Source: BTCUSD on TradingView

Main image from Dall-E, Alternative.net, chart from TradingView.com