Crypto Investors Get ‘Greedier’ As Bitcoin Price Goes Up
Nobody knows whether bitcoin will go up or down from here, but fear and greed indexes can offer a glimpse of crypto sentiment
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Crypto investors have become increasingly ‘greedy’ this year, but doubts persist over the sustainability of current bitcoin (BTC) momentum.
One general crypto Greed and Fear Index shows investor risk appetite is now at 62 — up 30% from one month ago, about the same as bitcoin, and more than double since Jan. 1.
The index’s yearly peak was 68, recorded in the second half of March, a few days after Silicon Valley Bank failed.
A value above 50 indicates the market is mildly greedy with 100 hinting at extreme greed, which is pitched as an indicator to sell. Values below 50 and at zero indicate fear, supposedly buying opportunities.
The metric reportedly takes into account crypto market volume, volatility, social media, token dominance and Google Search trends. These kinds of indexes serve as market thermometers and can be both leading and lagging indicators, making their accuracy difficult to quantify.
Still, greed cooling off can give room for more upward momentum, Ilya Volkov, CEO of Swiss-based Web3 firm YouHodler, told Blockworks.
“On-chain data indicators show that this trend is very likely to continue for a while,” Volkov said. “Crypto derivatives trading volume is also growing and open interest in crypto options is at its peak.”
Crypto greed trended upwards over the past year (source: Alternative)
Analysts at crypto exchange Bitfinex shared a different view, warning the market is in a state of transition in its April report.
“As bitcoin’s non-zero balance addresses reach new heights, on-chain metrics reveal the need to be cautious,” Bitfinex said. “Despite an influx of new market entrants, the sustainability of this phenomenon of both rapidly growing non-zero balances and tight range-trading for bitcoin remains uncertain.”
There are other portals tracking fear and greed across the digital asset market, each with their own metrics. LookIntoBitcoin, for one, studies only BTC sentiment. It’s showing practically the same local trend, although the greed hasn’t yet returned to levels seen before Terra imploded last May.
But for what it’s worth, the index recorded all-time greed (around 95) on multiple occasions between December 2020 and the following February, when BTC was exploding from under $18,000 to nearly $60,000.
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