The Crypto Fear and Greed Index, a significant metric gauging market sentiment in cryptocurrency markets, has soared to levels not witnessed since Bitcoin achieved its all-time highs (ATH).
On February 13, data from the website Alternative.me revealed that the Crypto Fear and Greed Index peaked at 79, marking its highest point since mid-November 2021, coinciding with Bitcoin’s price pinnacle of $69,000.
Greed Spikes as Bitcoin Crosses $50,000 Mark
The recent surge in greed on the Crypto Fear and Greed Index closely followed Bitcoin surpassing the $50,000 mark on February 12. Bitcoin has been on a steady upward trajectory in recent months, registering a year-to-date increase of approximately 13%, as per data from CoinGecko.
With a score of 79, the Crypto Fear and Greed Index has entered the “extreme greed” zone for the first time in over two years, indicating that the index value has exceeded 74.
Previously, the index touched extreme greed levels, reaching 76 on January 11, amidst the excitement surrounding the launch of spot Bitcoin exchange-traded funds (ETF) in the United States.
The ongoing rally in Bitcoin, coupled with the recent surge in greed, follows a month after the launch of the U.S. spot Bitcoin ETF. This suggests that any short-term selling triggered by the ETF approval news may have subsided. In late 2023, ARK Invest CEO Cathie Wood anticipated a scenario where investors would “sell the news” of the spot Bitcoin ETF approval in the short term.
Calculating the Fear and Greed Index
The Crypto Fear and Greed Index is derived from various signals influencing trader and investor behavior, such as Google Trends, surveys, market momentum, dominance, social media, and volatility. The index composition includes 25% market volatility, 25% market momentum, and 15% social media trends, among other indicators.
While the Crypto Fear and Greed Index offers valuable insights into the crypto market’s state, individual traders and investors are advised to conduct thorough research to determine the most suitable tools aligning with their investment objectives.