The Bitcoin fear and greed index, which tracks the community’s general sentiment on the primary cryptocurrency, has gone into a state of greed for the first time in nearly three months. This comes as BTC’s price has gone on a tear in the past few weeks, adding more than $10,000.
The fear and greed index is a popular metric that follows several aspects within the cryptocurrency community to determine the general feelings towards BTC and other digital assets. More precisely, those factors include surveys, social media comments, volatility, and volume.
The end results vary from 0 – meaning extreme fear to 100 – extreme greed. As the team behind the index explained it – the cryptocurrency market is very emotional as people “tend to get greedy when it is rising which results in FOMO” or they “often sell their coins in irrational reaction when seeing red numbers.”
With bitcoin, the metric was deep in a state of fear and even extreme fear for months. In fact, it was down there since May 12th when the cryptocurrency’s price began its freefall from nearly $60,000.
Now, though, the latest developments in the field have turned the crowd’s sentiment. As a result, the index has gone to 60 (greed) for the first time in nearly three months after plummeting to 10 (extreme fear) several times.
Apart from the factors mentioned above, the fear and greed index is perhaps most linked to the price of bitcoin. Consequently, getting out of the fear zone into greed now could be connected to the recent price surge.
After all, BTC dumped to a multi-month low of $29,000 less than two weeks ago – somewhat expectedly, the index went to 10 (extreme fear). While the community was expecting more of the same, the asset’s price went in the opposite direction, as it usually tends to do.
In a matter of days, it reclaimed $30,000, initiated another leg up, and even surpassed $40,000. As reported earlier, bitcoin went to a 10-week high of over $42,500.
As such, it’s worth having in mind that too much greed could be followed by corrections, just like price increases came in times of extreme fear.
