For the first time in nearly three months, the Bitcoin fear and greed index, which gauges the general sentiment on the principal cryptocurrency, has entered a condition of greed. This comes as BTC’s price has risen by more than $10,000 in the last two weeks.
Bitcoin Investors’ Greed
The fear and greed index is a popular tool that tracks many variables within the cryptocurrency ecosystem to gauge general sentiment toward BTC and other digital assets. Surveys, social media comments, volatility, and volume are some of the specific aspects.
The final scores range from 0 (severe fear) to 100 (extreme greed). According to the index’s creators, the cryptocurrency market is highly emotive, as users “tend to feel greedy when it is increasing, resulting in FOMO,” or they “frequently sell their coins in an irrational reaction upon seeing red numbers.”
For months, the bitcoin metric was engulfed in anxiety, perhaps excessive terror. Indeed, it has been there since May 12th, when the cryptocurrency’s price plummeted from about $60,000.
However, recent developments in the field have shifted the crowd’s sentiment. As a result, the index has risen to 60 (greed) for the first time in nearly three months after falling as low as 10 (severe dread) multiple times.
Is Greed a Good or a Bad Thing?
Aside from the previously listed factors, the fear and greed index is likely the most closely tied to the price of bitcoin. As a result, the recent price spike may be linked to the recent shift from fear to greed.
After all, BTC fell to a multi-month low of $29,000 less than two weeks ago – then, quite predictably, the index rose above 10,000. (extreme fear). While the community anticipated more of the same, the asset’s price moved in the opposite way, as it normally does.
It reclaimed $30,000 in a matter of days, started another run-up, and even topped $40,000. As previously reported, bitcoin reached a 10-week high of more than $42,500.
As a result, it is important to remember that excessive greed may be followed by corrections, just as price increases occurred during periods of strong fear.