The Psychology of Bitcoin Still Close to Extreme Greed: Need More Time to Cool Down to Bottom?

Data shows that the market sentiment of Bitcoin is still quite close to the extreme greed zone, a potential sign that the price may need to cool off further before hitting bottom. The Fear and Greed Index of Bitcoin still has a high Greed value "Fear and Greed Index" is an indicator created by Alternative, which informs us about the average psychology of investors in the Bitcoin market and cryptocurrencies in general. This index uses a scale from 0 to 100 to represent this psychology. A value greater than 53 means that investors in general are showing greed, while a value below 47 implies the presence of fear in the market. Values between these thresholds correspond to neutral sentiment. Here is the current situation in this field according to the Bitcoin Fear and Greed Index:

As can be seen above, the indicator has a value of 73 at this time, indicating that the average trader is being greedy. This greed mentality is also particularly strong, so strong that it is very close to a special area called extreme greed. Extreme greed occurs when the index reaches a value of 75 or higher. A similar zone also exists on the fear side, called extreme fear, and it is at a level of 25 or lower. According to history, extreme psychology has been proven to be important for Bitcoin and other cryptocurrencies, as peaks and troughs tend to occur when the market is in these areas. The relationship between price and sentiment is generally inverse, meaning extreme greed leads to a peak and extreme fear leads to a bottom. The BTC peak occurred at the beginning of the month when the index reached 87.

With the price decline that has occurred since then, the market sentiment has cooled off a bit. The question is: has it cooled off enough? While other market phases typically require a decline into fear or extreme fear for a bottom to occur, rising markets often do not see such a deep retreat. Normally, an adventure into a normal or neutral greed area is enough to restore the price momentum. However, recent psychology is still very close to extreme greed, so it may take a little more before real change is achieved. The Fear & Greed Index calculates its value based on multiple factors, one of which is social media sentiment. Although overall sentiment is still positive, it seems that social media users have started to show fear, as pointed out by Santiment analytics in a post on X.

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