With the crypto market having a wild December, the Bitcoin fear and greed index saw a drop from extreme greed into extreme fear. Although its index was able to slowly come close to neutral, the current market sentiment eventually went back to fear with a rating of 37 out of 100.
Bitcoin Fear and Greed Index
The market sentiment regarding cryptocurrency or stocks are important tools that help investors determine just what the general consensus is. This often helps dictate whether or not big moves are going to be made, if the price will fall, how strong the asset, is and more.
A tweet by BitcoinFear revealed the current market sentiment is at 37 out of 100. It should be noted that 100 is considered as extreme greed and zero as extreme fear. This, however, is still a huge improvement from the market's previous state when it crashed.
Bitcoin Fear and Greed Index is 37 - Fear
— Bitcoin Fear and Greed Index (@BitcoinFear) December 26, 2021
Current price: $50,848 pic.twitter.com/pnqRhV1Loi
What Does Greed Mean?
When the market is in a state of extreme greed, the price increases due to more and more people buying in. Investors, however, take advantage of extreme greed to sell, following a basic principle of investing which is buying low and selling high.
Extreme greed is also an indicator of smart investors to know when the market is usually oversaturated. By combining the Bitcoin fear and greed index and the RSI indicator, investors can see both when the market is in a state of extreme greed and when an asset is overbought.
What Does Fear Mean?
When the market is in a state of extreme fear, the price of the asset is usually bearish as investors are typically selling off due to panic. Smart investors, however, can use the situation to their advantage by buying in more of the asset when it is at what is referred to as "discount prices."
Extreme fear can also be used with RSI in order to determine the best buying points upon reversal. It, however, is also not a clear indicator since the asset can still remain bearish especially if it breaks another support.
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Bitcoin Fear and Greed Index Highs and Lows
Per the data from Alternative.me, Bitcoin's fear and greed index dropped down to 29 last week and was at neutral a month before with a rating of 47. In addition, the last time that BTC was in a state of greed, specifically a state of extreme greed, was in November 9, 2021.
The highest rating that Bitcoin got this year was on February 16 when the asset was at 95 over 100. This state of extreme greed cause more investors to buy BTC either as long term holds or as potential long term tradings.
According to the website, extreme fear could be a buying opportunity sign for interested investors while extreme greed could signal that the market is headed for a correction.
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This article is owned by Tech Times
Written by Urian B.
