Data shows that Bitcoin market sentiment remains quite close to extreme greed territory, a potential sign that prices may need to cool down further before bottoming out.

Bitcoin Fear and Greed Index Still Has High Greed Value

“Fear and Greed Index” is an indicator created by Alternative that tells us about the average sentiment of investors in the Bitcoin and cryptocurrency markets in general.

This index uses a number scale from 0 to 100 to represent sentiment. A value above 53 means that investors are generally showing greed, while a value below 47 implies the presence of fear in the market. Values ​​between these thresholds correspond to net neutral sentiment.

Here is the current state of the sector according to the Bitcoin Fear and Greed Index:

As you can see above, the indicator has a value of 73 at this point, indicating that the average trader is in a greedy mood. This greedy mood is also a particularly strong one, so strong that it is very close to a special zone called extreme greed.

Extreme greed occurs when the index reaches a value of 75 or higher. A similar zone exists on the fear side, called extreme fear, and is at 25 or lower.

Historically, extreme sentiment has proven important for Bitcoin and other cryptocurrencies, as peaks and troughs tend to occur when the market is in these zones.

The relationship between price and sentiment is generally inverse, meaning extreme greed leads to peaks and extreme fear leads to bottoms. BTC's peak at the beginning of the month occurred when the index was at 87.

With the price declines that have occurred since then, market sentiment has cooled a bit. The question is: has it cooled enough? While other market phases typically require a drop into fear or extreme fear for a bottom to occur, bull markets typically do not see such deep pullbacks.

Normally, a move into the normal greed or neutral zone is enough for the price to regain momentum. However, the recent sentiment is still quite close to extreme greed, so it may take a little more before a real change is achieved.

The Fear & Greed Index calculates its value using a number of factors, one of which is social media sentiment. While overall sentiment remains positive, it appears that social media users have begun to express fear, as analytics firm Santiment pointed out in a post on X.