Bitcoin Fear and Greed Index Soars to 2-Year High: What Does This Mean?
The Crypto Fear and Greed Index has soared to levels last seen in November 2021, when bitcoin (BTC) hit an all-time high of more than $69,000.
According to crypto data source Alternative.me, the Fear and Greed Index is currently at 71, indicating a greed sentiment among market participants.
BTC Investors Have Become Greedy
The Crypto Fear and Greed Index is a popular tool that measures investor sentiment across the digital asset market. It postulates two assumptions: extreme fear is a sign that investors are too worried and that could be a buying opportunity, while excessive greed means the market is rising and due for a correction, pushing investors to be cautious.
The index uses several metrics, including volatility, market momentum, social media, surveys, Bitcoin’s dominance, and trends, to analyze the current sentiment of the market on a meter from 0 to 100, with 0 signaling extreme fear, 50 signifying neutrality, and 100 indicating extreme greed.
When the market is rising, people tend to get greedy, and the fear of missing out (FOMO) sets in, leading to impulsive buying and selling of crypto assets. As the Fear and Greed Index is currently at 71, it is a sign that investors are more confident in the prospects of cryptocurrencies, especially BTC.
What Does This Mean?
On October 24, BTC recorded its latest single-day surge in over a year, climbing 14% to the $35,000 level. The pump was attributed to excitement around the possible approval of BlackRock’s spot Bitcoin exchange-traded fund (ETF) application by the U.S. Securities and Exchange Commission (SEC).
The leading digital asset jumped from $28,000 to $30,000 on October 16, although the rally was caused by unverified news about the SEC greenlighting BlackRock’s spot Bitcoin ETF proposal.
While BTC’s price has retracted and currently hovers around the $34,400 price range, the cryptocurrency has gained roughly 28% in less than two weeks. The asset’s current greed ranking represents a 24-point increase from its October 16 figure of 47 and a five-point jump from 66 on October 24.
The greed ranking indicates a bullish stance and aligns with recent views that the bear market may be over, and BTC and other cryptocurrencies may continue with their impressive performance.
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