Data shows that sentiment around Bitcoin has cooled from extreme greed as bearish price action for BTC and other cryptocurrencies continues.
Bitcoin Fear & Greed Index Now Points To ‘Greed’
The “Fear and Greed Index” is an indicator created by Alternative that tells us about the average sentiment among investors in the Bitcoin and broader cryptocurrency markets.
This metric uses a numerical scale from zero to one hundred to represent sentiment. Any values above 53 correspond to investors harboring a sense of greed, while values below 47 suggest fear in the market. The area between the limits implies a net neutral mentality.
Here’s what the Bitcoin Fear & Greed Index says about current market sentiment:
The value of the index appears to be 74 at the moment | Source: Alternative
As visible above, the indicator has a value of 74, which means that the investors currently share a feeling of greed. This current value is also quite deep in the region, so deep that it is right on the border of a so-called special zone extreme greed.
The market experiences extreme greed when the index rises above 75. There is also a similar area for the anxiety side, known as extreme anxiety, which occurs under the age of 25.
The extreme sentiments have historically been quite significant for Bitcoin and other cryptocurrencies, as major highs and lows have often occurred in these regions.
The relationship between sentiment and price has been inverse, meaning that extreme greed has been the area where the tops have occurred, while extreme fear has been the area of the bottoms.
During the final stages of the bull run, the index was generally in the zone of extreme greed. The metric was in the region yesterday.
Looks like the value of the metric has registered a cooldown in recent days | Source: Alternative
The change in sentiment has come as BTC witnessed a withdraw and the altcoin market has suffered a crash. Given the historical pattern that Bitcoin has generally observed, this latest cooldown in investor sentiment could prove positive and potentially allow the rally to continue.
In other news, the estimated leverage ratio for the BTC-USDT pair has recently seen a decline, as CryptoQuant founder and CEO Ki Young Ju noted in an after.
The trend in the BTC-USDT Futures Leverage Ratio over the last couple of years | Source: @ki_young_ju
The estimated leverage ratio measures the average amount of leverage that users of the futures market opt for. The fact that this metric has recently registered a decline could be constructive for Bitcoin, as it means there is a lower risk of a chaotic mass liquidation.
BTC price
Bitcoin had fallen below $94,300 yesterday, but it seems the coin has recovered quickly as the price is already back at $98,500.
The price of the coin appears to have seen a pullback during the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, Alternative.me, chart from TradingView.com