Crypto Fear and Greed Index Hits 3-Month High as BTC Rallies

As Bitcoin (BTC) has soared beyond $60,000 since the start of the week, investors are displaying signs of greed. This shift is reflected in the Fear and Greed Index, which indicates market sentiment at any given moment, turning green over the past couple of days.

According to data from Alternative.me shows that the Fear and Greed Index is currently positioned in the greed zone, with a value of 71.

Crypto Investors Are Feeling Greedy

Last week, the Crypto Fear and Greed Index was situated in the fear zone and remained there until Monday when it reached a neutral status. The index even dipped to 32 on October 11, coinciding with BTC briefly falling below $60,000. Throughout most of September, the index lingered in fear and neutral zones, only making its way into the greed area as BTC experienced a brief rally to $65,000 near month’s end.

In the past three days, BTC has surged past the $62,000 range, hitting $68,000, and is currently trading around $67,000, according to CoinMarketCap data. This surge has fueled greed among traders eager to capitalize on Bitcoin’s rise and combat the fear of missing out (FOMO). The index peaked at 73 on October 16 when BTC reached $68,400, but has since dropped slightly to 71, following a minor correction in the cryptocurrency’s price.

The index is calculated by evaluating data from several sources, including social media, trends, market momentum, volatility, surveys, and market dominance. The values range from 0 to 100, where 0 signifies extreme fear, 50 indicates a neutral stance, and 100 represents extreme greed.

Historically, investors tend to become fearful during price declines, and analysts suggest these moments are prime buying opportunities. Conversely, when prices are on the rise, market participants often succumb to greed, leading to FOMO and potential price corrections.

What Might Happen Next?

The last occurrence when the Fear and Greed Index peaked this high was in late July, as BTC rallied from the $56,000 range to $68,000. However, due to the crisis surrounding the Japanese yen, the asset subsequently plummeted to $53,000 in the following days.

While BTC could encounter similar challenges in the days ahead, factors such as increasing demand and the market’s anticipation of a second bull cycle leg suggest that such a scenario may be less likely.