The Bitcoin Fear & Greed Index has risen to its highest level in almost three years, hitting Extreme Greed at rocket speed. Using past performance and indicators, it is possible to deduce where the BTC price is headed after reaching this new milestone.
Bitcoin Fear & Greed Index at new 2-year high
The Bitcoin Fear & Greed Index is a measure of investor sentiment and how they view the market. This can help find out whether investors are currently putting money into the market or taking money out.
There are five main categories in the Fear & Greed Index, including Extreme Fear, Fear, Neutral, Greed and Extreme Greed. The index is ranked on a scale of 0-100, with a series of numbers representing a category of investor sentiment.
Extreme fear is the lowest on this scale, which ranges from 0 to 25. Then, from 26 to 46, we have fear. Both categories indicate investors’ reluctance to enter the market and are often presented as the best time to invest in crypto.
Next on the scale is 47 to 52, which represents neutral territory. Then 53 to 75 is greed, when investors start to gain confidence in the market. Finally, 76 to 100 is Extreme Greed, which represents the highest bullishness. Like the The Bitcoin Fear & Greed Index is currently at 79what Extreme Greed is could have some consequences for the market.
BTC price pushes toward $57,000 | Source: BTCUSD on Tradingview.com
Extreme greed marks the top?
Just as the Bitcoin Fear & Greed Index can be useful in determining a good time to buy, it can also provide clues to when a market top might occur. Looking at the historical performance of the crypto market compared to the Fear & Greed Index, we see a continued correlation between peak euphoria and the market top.
The most recent example of this is November 2021, when the index’s score rose as high as 84, just 5 points short of the current score of 79. At this point, Bitcoin’s price had risen to $69,000 before resistance emerged, where it eventually will succumb to.
In the following days, sentiment would begin to turn, as would Bitcoin’s price. A similar pattern was also observed in February and March 2021, when the index reached a high of 94. The following days saw interest rates decrease, marking the peak at that particular point.
If the same pattern were to repeat in this scenario, Bitcoin could be at the starting line for a few more days before reaching the top. Currently, the cryptocurrency is already experiencing significant resistance at $57,000, which could indicate that the top is near.
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