The crypto fear and greed index still indicates “extreme greed” despite recent drops in the price of BTC.
The index has been showing “extreme greed” for more than two months now.
The positive development of the sector seems to be the driving force behind the rise in prices and investor confidence.
The Crypto Fear and Greed index, in French “Index of fear and greed”, continues to give a reading of “extreme greed”, despite a decline in the price of Bitcoin . The main cryptocurrency briefly fell below $ 33,700 on January 20.
The Fear and Greed Index suggests “extreme greed” in the Bitcoin market since early November. However, confidence now appears to be eroding.
Bitcoin market remains in a state of “extreme greed”
The index Crypto Fear and Greed of Alternative.me provides read “Extreme Greed” for months now.
The indicator uses volatility, social media engagement, market dominance, and Google trends to gauge investor sentiment toward cryptocurrency.
Crypto fear and greed index is at 78: extreme greed
Even the sharp drops in the price of Bitcoin have not dampened the enthusiasm of traders and investors. At 78/100, the January 20 indicator was still above the extreme greed threshold.
At the time of the price reading, BTC had already fallen more than $ 1,000 from its highest level the day before ($ 37,600). That decline continued, with the cryptocurrency hitting its low of $ 33,700 on January 20.
Likewise, on January 11, just days after peaking at nearly $ 42,000, Bitcoin fell below $ 32,000. Despite this decline of around 25%, the index still gave an “extreme greed” reading of 84/100 on January 12th.
It’s no surprise that the market remains bullish even in the face of such setbacks. Bitcoin broke its all-time high earlier this month after numerous bullish developments.
The business investment , such as those of MicroStrategy , and the growing interest of institutions, such as purchases of Bitcoin by MassMutual, have highlighted the growing appeal of this asset from a different class of investors. Likewise, JPMorgan , the former Bitcoin opponent, took a bullish turn predicting that the digital asset’s price could exceed $ 146,000.
How long will the market stay hungry?
Although the Fear and Greed crypto index has continued to show a level of “extreme greed” for two and a half months, its results last week have started to decline.
For the whole of December and the beginning of January, almost all readings were above 90/100. However, since the 25% correction at the beginning of the month, the results have not exceeded 90.
This indicates that the market exuberance is waning. The January 20 reading (78) is the same as the January 13 reading, which is the lowest reading since November 5.
Still, some big Bitcoin buyers are taking advantage of lower prices to buy more. As BeInCrypto reported on January 19, Grayscale bought an additional 16,244 BTC in a single day.
This follows the January 13-14 purchases of over 4,700 BTC . Many other 24-hour periods were marked by Grayscale purchases of more than the 900 BTC usually mined in a single day.
The company has also signaled a surge in institutional interest in the final months of 2020. Its recent purchase of Bitcoin suggests that it expects the trend to continue.