Data shows that greed in the cryptocurrency market has risen to a seven-month high as coins hit all-time highs (ATHs).
Fear of crypto and greed index score in extreme greed
According to the latest weekly report from Arcane Research, the Fear and Greed Index is at a seven-month high with the needle pointing to extreme greed.
The Fear and Greed Index is an indicator that represents the general sentiment of the cryptocurrency market on a numerical scale ranging from 0 to 100.
When the scale has values below 50, it means that there is, on average, fear among investors. Values less than 25 indicate extreme fear. Such sentiment is usually seen after major corrections, and periods of intense fear may prove to be good buying opportunities.
While a needle pointing above 50 means that the crypto market is starting to get greedy. Extreme greed occurs when values exceed 75. Very high values near 100 may mean that there will be a correction soon, so investors may not buy more at this point.
This is a metric that shows the current market sentiment:
The fear and greed index seems to be pointing at extreme greed at the moment | Source: The Arcane Research Weekly Update - Week 42
As the above metric shows, the cryptocurrency market appears to be very greedy at the moment with the index valued at 76.
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The values of the previous week and the previous month were also compared to less than a meter, which were 75 (extreme greed) and 27 (fear), respectively.
The chart below gives a better idea of how current Fear & Greed Index values compare to past values:
The values of the indicator over the last one year | Source: The Arcane Research Weekly Update - Week 42
When examining the above chart, it becomes clear that the Fear and Greed Index reached values of 84 this week, which is the highest level in the past seven months.
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This peak was reached just a day after Bitcoin made a new ATH of around $67K, but shortly after a price correction occurred. The chart below shows this trend in BTC price:
BTC's price continues to go down after making a new ATH | Source: BTCUSD on TradingView
The Fear and Greed Index has also taken a hit in response to this Bitcoin price drop, but nonetheless, values are still in the extreme greedy category, which means that the crypto market is still anticipating a price hike.
During the rally earlier in the year, values held steady in the extreme greedy category, and corrections only caused a temporary drop in the index.
This means that if the market is to continue making newer ATHs, the market sentiment must remain greedy, otherwise the uptrend may start to lose steam.
Featured image from iStock.com, charts from TradingView.com, Arcane Research