The Bitcoin Fear and Greed Index is an indicator of investor sentiment and views on the market. It helps to understand whether investors are putting money into or withdrawing money from the market.
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The Fear and Greed Index has five main categories - Extreme Fear, Fear, Neutral, Greed, and Extreme Greed. The indices are ranked on a scale from 0 to 100, with the range of numbers reflecting the category of investor sentiment.
The "Extreme Fear" index is the lowest on this scale, ranging from 0 to 25. The next category, "Fear," ranges from 26 to 46. These two categories indicate investors' reluctance to enter the market and are often presented as the best time to invest in cryptocurrencies.
Next, 47 to 52 is neutral territory. Next, 53 to 75 is greed, a time when investors begin to trust the market. Finally, 76 to 100 is extreme greed, representing the peak of bullish sentiment. Bitcoin's Fear and Greed Index is currently at 79, which corresponds to extreme greed, which could have some impact on the market.
Does extreme greed represent a peak?
Just as bitcoin's fear and greed index can help determine when to buy, it can also suggest when a market peak might be coming. Historical #cryptocurrency market performance against the fear and greed index shows a strong correlation between euphoria peaks and market tops.
See also Polygon's vesting agreement officially emptied, MATIC is now priced at $BTC The most recent example was in November 2021, when the index rose to 84 points, just five points short of the current 79 points. At that point, the #bitcoin price rose to $69,000, but encountered resistance that was soon overcome.
After that, sentiment began to change and so did the bitcoin price. A similar pattern was seen in February and March 2021, when the index reached a high of 94. Interest in the index declined in the following days, after which it reached a high.
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