Data shows the Bitcoin trader sentiment has been teetering on the edge of extreme greed for the last few days, a sign that a break may be coming.
The index uses a numerical scale running from zero to hundred for representing the market sentiment. All values above 53 correspond to greed among the investors, while those below 47 suggest the presence of fear. The in-between levels naturally correspond to a net neutral mentality.
Now, here is how the current market sentiment looks, according to the Fear & Greed Index:
As is visible above, the indicator currently has a value of 74, which implies the investors as a whole share a sentiment of greed and a strong one at that, considering the high value.
In fact, this value is so high that it’s right on the gateway to a special zone called the extreme greed. This region, which is situated beyond the 75 level, corresponds to euphoria among the Bitcoin traders. There is a similar territory on the other end of the scale as well, known as extreme fear (under 25). When the index is in this zone, it naturally suggests the investors are in the deepest state of despair.
Historically, both of these zones have held much significance for Bitcoin and other digital assets, as major reversals have occurred when the investors have held these mentalities. Thus, extreme greed can lead to a top and extreme fear to a bottom.
It only remains to be seen how long this would hold, however, considering that the Fear & Greed Index has been sitting on this boundary level for three straight days now.
Any continuations to the rally could take the market sentiment beyond the extreme greed threshold, at which point a reversal could become more likely, the higher the index ventures into the zone.
At present, the 30-day correlation between Bitcoin and Gold is sitting at a value of -0.54, which means that over the past month, the two have traveled oppositely to each other to some degree.
Bitcoin saw a sharp burst to the $107,000 level yesterday, but the coin has since fallen off just as rapidly, as its price is now floating around $102,300.
