Data shows that Bitcoin market sentiment is still quite close to the extreme greed area, which may indicate that further price cooling may be needed before a bottom is reached.
The Bitcoin Fear & Greed Index still has a high greed value.
"Fear & Greed Index" refers to an indicator created by Alternative that tells us the average sentiment of investors in Bitcoin and the broader cryptocurrency market.
This index uses a numerical scale from 0 to 10 to represent this mentality. Values above 53 indicate that investors as a whole are exhibiting greed, while values below 47 indicate fear in the market. Values between these thresholds correspond to a net neutral sentiment.
Now, here’s how the current sentiment in the industry looks based on the Bitcoin Fear and Greed Index:
The value of this index seems to be 73 | Source: Alternative
As shown above, the current value of this indicator is 73, indicating that average traders hold a greedy sentiment. This greedy sentiment is also a particularly strong emotion, in fact, it is so strong that it is very close to a special area called extreme greed.
Extreme greed occurs when the index reaches a value of 75 or higher. The fear side also has a similar area known as extreme fear, located at 25 or below.
Historically, extreme emotions have proven to be significant for Bitcoin and other cryptocurrencies, as tops and bottoms often occur when the market is in these areas.
The relationship between price and sentiment is often inverse, meaning extreme greed leads to tops, and extreme fear leads to bottoms. Earlier this month, the top for BTC occurred when this index was at 87.
It appears that the value of the index has decreased in recent days | Source: Alternative
With the subsequent price drop, market sentiment has cooled somewhat. The question is: Has it cooled enough? While other stages of the market typically need to dip into fear or extreme fear to find a bottom, bull markets usually do not see such deep corrections.
Many times, venturing into the normal greed zone or neutral area is enough to regain momentum for prices. That said, recent sentiment is still very close to extreme greed, so more time may be needed before reaching a true turning point.
The Fear and Greed Index calculates its value using various factors, one of which is social media sentiment. While the overall sentiment remains optimistic, as noted by analysis company Santiment in a post on X, social media users seem to have begun to exhibit fear.
Social media sentiment trends for Bitcoin and other coins | Source: Santiment on X
BTC Price
Bitcoin has rebounded significantly by 6% in the past 24 hours, which may indicate that the decline in greedy sentiment could be enough to restart the rebound.
