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Bitcoin Fear and Greed Index Approaches Extreme Greed Reading

2 mins
Updated by Ryan Smith
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In Brief

  • The Bitcoin Fear & Greed Index registers at 78, the highest level in over a year.
  • This could be a warning sign, however, the index has no data points from major bull runs before 2018.
  • Social unrest and massive global stimulus will likely continue to drive investors into safe-haven assets.
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Bitcoin is on the verge of breaking another yearly high around $12,000. However, can it sustain this momentum? Well, one novel index shows that bitcoin traders are becoming extremely greedy.
The Crypto Fear & Greed Index tracks market sentiment for Bitcoin and other major cryptocurrencies. Emotional extremes typically signal market tops and bottoms as fearful people sell into liquidations or Lambo-dreaming buyers jump on board at any price. The index currently registers at 78 out of a possible 100, a reading of ‘Extreme Greed.’ In only a month the largely subjective stat has jumped from a neutral reading of 44, thanks to momentous rallies in all of the top-tier cryptos.
Crypto fear index
Source: Fear & Greed Index

Playing Devil’s Advocate

On the flip side, the index has only tracked data since early 2018. This is particularly inconvenient since there are minimal data points on the major parabolic runs, like the 2017 rally to just under $20,000, for example. The bitcoin halving has come and gone, and the general consensus is that there’s nothing left to stop the alpha crypto from adding more zero’s to its USD tally. The last time the index was this high, and indeed the highest on record, was over a year ago when BTC fell just short of $14,000. Superimposing the BTC/USD chart over the Fear & Greed Index reveals that this kind of market sentiment does provide some valuable insights into the irrational minds of traders. But, just like every other indicator out there, there is no silver bullet.
Crypto fear index
BTC/USD superimposed on the fear index | Source: Fear & Greed Index

Bitcoin Fundamentals in Play

Despite the crypto community’s love of speculation, there’s likely more than just technicals in play here. Social unrest and massive global stimulus continue to drive investors into safe-haven assets like gold, silver, and bitcoin. Well-known maximalist, Max Keiser, early on Monday even speculated that stressed Asian capital is all but boarding the Bitcoin express. A number of industry players remain openly bullish on crypto, as Diogo Monica, President, and Co-Founder of Anchorage tells BeInCrypto:
Many investors used lack of institutional infrastructure as their justification for missing the 2017 crypto bull-market. Missing the next bull run can only be justified by unsound investment strategy.
With so many bullish views out there, how will the index fare this time? Only time will tell.
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Ryan Smith
Ryan was BiC's U.S. Time Zone Editor until the end of Feb 2021. He is fascinated with the history and evolution of money and the role that crypto plays in fixing a broken financial system. When not meticulously looking over the charts, he can be found jamming some board games or running the trails in his local nature reserve.
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