Bitcoin Extreme Greed Is Here—Time To Be A Contrarian?

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Information exhibits the Bitcoin market sentiment has damaged into the intense greed territory following the cryptocurrency’s new excessive above $111,000.

Bitcoin Worry & Greed Index Has Shot Up Not too long ago

The “Fear & Greed Index” refers to an indicator created by Different that tells us concerning the sentiment held by the typical dealer within the Bitcoin and wider cryptocurrency markets. The metric makes use of a numerical scale working from 0-100 with a purpose to symbolize the sentiment. All values above 53 symbolize greed among the many traders, whereas these beneath 47 point out worry. The index mendacity between these two cutoffs implies a web impartial mentality.

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Besides these three important zones, there are additionally two ‘extreme’ areas known as the intense greed (above 75) and excessive worry (beneath 25). At current, the market sentiment is inside the previous of the 2, based on the newest worth of the Worry & Greed Index.

Bitcoin Extreme Greed — The index is at a worth of 78 | Supply Different

Traditionally, the intense sentiments have held a lot significance for Bitcoin and different digital property, as they’ve been the place main tops and bottoms have tended to kind. The connection has been an inverse one, nevertheless, that means that an excessively bullish environment makes tops possible and an extra of despair bottoms.

Some merchants exploit this reality with a purpose to time their purchase and promote strikes. This buying and selling method is popularly often called contrarian investing. Warren Buffet’s well-known quote sums up the core thought: “be fearful when others are greedy, and greedy when others are fearful.”

With the Bitcoin sentiment now making a return into the intense greed area, it’s attainable that followers of this philosophy could also be beginning to look towards the exit.

Bitcoin Fear Greed Index — The development within the Worry Greed Index over the previous twelve months | Supply Different

That mentioned, the Worry & Greed Index has a worth of ‘just’ 78 for the time being. For comparability, the December high occurred at round 87 and the January one at 84. Earlier within the rally, the metric even hit a a lot greater peak of 94 in November.

As such, it’s attainable that the present market will not be fairly that overheated by way of sentiment simply but, assuming demand from the traders doesn’t let off. It solely stays to be seen, although, how Bitcoin and different cryptocurrencies would evolve below this excessive greed.

Talking of demand, whales have simply made a major quantity of withdrawals from the Binance platform, as CryptoQuant group analyst Maartunn has identified in an X publish.

Bitcoin Exchange Netflow — The Alternate Netflow for Binance has simply seen a big purple spike | Supply: @JA_Maartun on X

The indicator displayed within the chart is the “Exchange Netflow,” which tells us concerning the web quantity of Bitcoin that’s transferring into or out of the wallets related to a centralized trade, which, on this case, is Binance.

Clearly, the Binance Alternate Netflow has noticed a big damaging worth, implying that the traders have shifted a notable quantity of cash out of the trade. Extra particularly, web outflows for the platform have stood at 2,190 BTC or about $237 million.