Bitcoin is currently experiencing a wave of optimism as it approaches the $100,000 mark, supported by unprecedented levels of greed among investors.
The Fear and Greed Index for cryptocurrencies rose to 94, the highest level in 3.5 years.
This level reflects an overly optimistic psychological state towards the market.
Fear and Greed Index Effect:
The index is based on factors such as market volatility, momentum, and Bitcoin dominance.
The indicator shows that investors are in a state of “extreme greed,” which often happens when prices reach short-term peaks.
Historically, such high levels of the indicator usually lead to large corrections in the price of Bitcoin, as the market needs to rebalance after a sharp rally.
With Bitcoin hitting $99K, it is less than 2% away from hitting the $100K target.
But the recent surge in the currency could put pressure on the market, especially as greed has risen to levels reminiscent of previous corrective periods.
In February 2021, when the index reached 94, a market correction followed.
Even during Bitcoin's previous peak in November 2021, the index did not reach these high levels, reinforcing fears of an imminent correction.
These corrections are usually followed by a shift of capital from Bitcoin to altcoins, causing what is known as “altcoin season.”
As Bitcoin's dominance wanes after its massive rally, investors are turning to other cryptocurrencies that are seeing big gains.
With these current circumstances, it seems that the altcoin season is approaching.
Market forecast:
The expected Bitcoin correction may be necessary to support the continuation of the long-term uptrend, possibly extending to 2025.
At the same time, the market may see a shift towards alternative cryptocurrencies, providing significant opportunities for investors in these assets that are less valuable than Bitcoin.
