With the price of Bitcoin crossing the $ 40,000 mark in recent days, for the first time since May, the Bitcoin Fear and Greed Index has entered the greed range. Experts warn that over-greed for investors could lead to a downward correction in prices.
to the Report Crypto Potito, the Bitcoin Fear and Greed Index, which monitors society’s general feelings about Bitcoin, has entered a state of greed for the first time in three months. The price, meanwhile, has performed well over the past few weeks, rising more than $ 10,000.
The Fear and Greed Index is a well-known measure that monitors various aspects of the digital currency community to determine general feelings about bitcoin and other digital currencies. More precisely, this criterion includes data such as survey information, users’ opinions on social networks, the amount of price fluctuations and the volume of transactions.
Also read: What is the index of fear and greed and what is its use in price analysis?
The results of this index vary between zero, which means intense fear, and 100, which means intense greed. As the development team of this index has said, “The digital currency market is very emotional, because as the price of greed increases in people, which leads to the formation of a feeling of fear of falling behind the market profit or FOMO, and on the other hand traders “By seeing red numbers, they often sell their currencies in an irrational reaction.”
Bitcoin was in a state of fear and even extreme fear for several months. In fact, this situation started on May 12 (May 22) and at the same time with the free fall of the price from the peak of $ 60,000.
Recent developments have changed the price of people’s emotions. As a result, after falling several times and reaching the number 10 (severe fear), this index reached the level of 60 (the range of greed) for the first time in the last 3 months. It is worth mentioning that shortly after reaching this range, we saw a return to the neutral range and level 48.
Regardless of the criteria mentioned at the outset, it may be argued that the fear and greed index is more closely linked to the price of bitcoin, so exiting the fear and entering the greed zone may be related to the recent price increase.
The price of Bitcoin fell to $ 29,000 less than two weeks ago, the lowest level in months. At that time, as expected, the index reached 10 (severe fear). While the digital currency community expected a further decline, the price of Bitcoin moved in the opposite direction, as it usually does.
Bitcoin reached $ 30,000 again in a few days and started another uptrend. The price even crossed the $ 40,000 mark and reached its highest level in the last 10 weeks, ie more than $ 42,500.
In general, it should be borne in mind that the excessive greed of investors can lead to a downward correction in prices, just as when the price of bitcoin rose when the index reached the extreme fear range.