Data shows the Bitcoin market sentiment has turned to greed again as the cryptocurrency price has sharply risen above the $25,000 level.
Bitcoin Fear And Greed Index Is Pointing At Greed Once Again
The “fear and greed index” is an indicator created by Alternative that tells us about the general sentiment among traders in the Bitcoin and wider cryptocurrency market. The metric measures this sentiment using a numeric scale from zero to a hundred.
All values above the 54 mark imply that the investors are greedy right now, while those below the 46 levels suggest the market is fearful currently. The region in between these two zones signifies a territory of neutral sentiment.
Besides these sentiments, there are also two “extremes,” called extreme fear (occurs below a value of 25) and extreme greed (above 75). Historically, these zones have been important for the price of BTC, as cyclical bottoms and tops have generally taken shape when the market has held these sentiments.
Because of this reason, some traders think that the best times to buy are when the market is showing extreme fear, while the best selling opportunities take place at extreme greed.
This trading strategy is often called “contrarian investing.” Warren Buffet’s famous quote echoes the same idea: “be fearful when others are greedy, and greedy when others are fearful.”
Now, here is what the Bitcoin fear and greed index looks like at the moment:
The sentiment in the BTC and wider crypto sector right now | Source: Alternative
As the chart above shows, the fear and greed index currently has a value of 56, which means that the BTC and wider cryptocurrency market sentiment has just stepped inside the greed territory.
However, only a couple of days back, the investor mentality was still firmly inside the fear zone. The below chart shows how the value of the indicator has changed recently.
Looks like the value of the metric has sharply jumped in the last couple of days | Source: Alternative
The chart shows that the Bitcoin fear and greed index had surged out of the fear zone when this rally first started in January. Since then, the values fluctuated between the greed and neutral territories for a couple of months until a few days ago when the price plunge lead to the mentality also falling off.
However, BTC got out of the fear zone fast, and as the crypto rallied in the past two days, the indicator also shot up. The sentiment towards greed has improved thanks to the price of BTC rocketing today, as the asset has now crossed the $25,000 level.
It remains to be seen whether investors will continue to become more optimistic in the coming days or if the sentiment will once again stagnate as it did earlier during the rally.
At the time of writing, Bitcoin is trading around $25,900, up 16% in the last week.
BTC seems to have shot up over the past day | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Alternative.