Data shows that Bitcoin sentiment has cooled from extreme greed amid continued bearish price trends for BTC and other cryptocurrencies.
Bitcoin’s Fear and Greed Index now points to “greed”
The “Fear & Greed Index” is an index created by Alternatives that tells us about the average sentiment of investors in Bitcoin and the broader crypto market.
This indicator represents sentiment using a numerical scale from 0 to 100. Any value above the 53 mark represents a feeling of greed among investors, while any value below 47 suggests fear in the market. The area between the cutoffs represents a net-neutral mindset.
Well, here’s what the Bitcoin Fear and Greed Index says regarding current market sentiment.
The index value appears to be 74 at the moment. Source: Alternatives
As seen above, the value of this indicator is 74, meaning that investors are currently sharing the greedy sentiment. This current value is also quite deep in this region, so much so that it is on the border of a special zone called Extreme Greed.
When the index crosses the 75 mark, the market experiences extreme greed. There is a similar area in the fear dimension known as extreme fear, which occurs before the age of 25.
Extreme sentiment has historically been very important for Bitcoin and other cryptocurrencies, as large peaks and troughs tend to occur in these regions.
The relationship between sentiment and price is reversed, meaning that extreme greed is the area of highs and extreme fear is the area of troughs.
During the most recent leg of the bull market, the index generally spent time within the extreme greed zone. This indicator was in the area just yesterday.
The metric values seem to have hit a cooldown in the last few days | Source: Alternatives
The change in sentiment comes after Bitcoin fell and the altcoin market crashed. Given the historical patterns that Bitcoin has typically observed, this cooling in investor sentiment could turn into a positive and the rally could continue.
In other news, we observed that the estimated leverage ratio of the BTC-USDT pair has recently decreased, as noted by Ki Young Ju, founder and CEO of CryptoQuant, in an X post.
Trends in BTC-USDT futures leverage ratio over the past few years | Source: @ki_young_ju
The estimated leverage ratio measures the average amount of leverage that futures market users are choosing. The fact that this indicator recently recorded a drawdown could be constructive for Bitcoin as it means the risk of a chaotic mass liquidation event occurring is low.
BTC price
Yesterday, Bitcoin fell below $94,300, but Bitcoin seems to have recovered quickly, with the price already back to $98,500.
The price of the coin appears to have fallen over the past few days. Source: BTCUSDT on TradingView
Featured images from Dall-E, CryptoQuant.com, Alternative.me, charts from TradingView.com
