Cryptocurrency Fear & Greed Index Goes Extremely Greedy Again As Bitcoin Price Surges to $101,000, Is This Good News?

Bitcoin price has risen back above the $100,000 level after three consecutive days of rising prices. In particular, Bitcoin’s returns above $100,000 come on the back of a 12.5% ​​increase after it rebounded from the $90,000 support level on Monday, January 13.

As expected, this positive momentum with Bitcoin has trickled down to other cryptocurrencies. Major altcoins mirrored Bitcoin’s rise, contributing to a notable increase in the overall cryptocurrency market capitalization. A byproduct of this increase in cryptocurrency market capitalization was the concurrent movement in the Cryptocurrency Fear and Greed Index, which is now… Moving to the threshold of extreme greed.

The index of fear and greed shifts to extreme greed

the Fear and Greed Index in Cryptocurrencies It is a popular indicator that measures market sentiment on a scale from 0 to 100. The scale is ranked from the low end of extreme fear to the high end of extreme greed and a neutral area in the middle. Periods of intense fear are Characterized by oversold conditions And bearish market sentiment, which often appears Buying opportunities.

Related reading

On the other hand, when greed dominates, it is often a signal Overbought conditions. It also opens up the possibility of an approaching correction or collapse, especially if there is a rapid shift from neutral greed to extreme greed.

The entire cryptocurrency market capitalization saw steady inflows this week. Data from CoinMarketCap shows that the total cryptocurrency market cap started the week at around $3.14 trillion. This number has risen to $3.57 trillion at the time of writing, representing an inflow of about $430 billion in the past five days. This 13.5% jump indicates increased optimism as Bitcoin and a few major altcoins now look to return to new highs.

These recent inflows into the cryptocurrency market have seen the index move from a neutral threshold at the start of the week to a greedy threshold at the time of writing. What is particularly striking is the speed with which sentiment has shifted. As of now, the indicator is approaching the extreme greed threshold, an area that indicates the market may be entering the overbought zone.

Where does Bitcoin price go from here?

The ability of the market to maintain its course and maintain feelings of greed depends on it Bitcoin’s ability to maintain the price More than US$100,000, given its dominant position in the market. If the bulls succeed in defending the $100,000 mark and holding it as a strong support level, this could mitigate the risks of extreme greed leading to overbought conditions and a subsequent downward correction.

Related reading

A Support is above $100,000 It will essentially reset the fear and greed index for cryptocurrencies around this level. Failing to hold more than $100,000 may validate the historical trend that intense feelings of greed typically lead to a crash.

At the time of writing, Bitcoin is trading at $101,420 and is up 1.6% in the past 24 hours.

Featured image created with Dall.E, chart from Tradingview.com