Data shows that the Bitcoin Fear and Greed Index has now reached its highest level since the November peak as the cryptocurrency’s price surged.
Bitcoin Fear and Greed Indicator Now Pointing to ‘Greed’
According to the latest weekly report from obscure research BTC Fear and Greed Index rose to greedy sentiment values this week.
The “Fear and Greed Index“Is an indicator that tells us about the current general market sentiment among Bitcoin investors.
The scale uses a numeric scale that goes from one hundred to one hundred to represent this feeling. All values above 50 indicate that investors are currently greedy. While those who are below the cap indicate a frightening market.
Values greater than 75 and less than 25, i.e. the values at the ends of the range, represent extreme greed and intense fear respectively.
Now, here is a chart showing the trend in the Bitcoin Fear & Greed Index over the past year:
Looks like the value of the indicator has surged up recently | Source: Arcane Research's The Weekly Update - Week 12, 2022
As you can see in the above chart, the Bitcoin Fear and Greed Index has risen sharply over the past week. The index value is now 56, which indicates that the market is getting greedy.
This scale value is now more than for any other period in 2022 so far and is the highest since the peak in early November last year.
Historically, Bitcoin tops tended to occur while feeling very greedy, and bottoms formed during periods of intense fear.
There is a popular trading technique called “contrast investing” that uses this fact. Traders who follow this methodology believe that the best time to buy is during extreme fear, while extreme greed is when to sell.
This famous Warren Buffett quote sums up this philosophy: “Be afraid when others are greedy, and be greedy when others are afraid.”
So, following the investor’s contrarian line of thinking, the current market sentiment turning greedy may be a sign that you should now start to get scared instead.
At the time of writing this report, Bitcoin’s price is floating around $47.3K, up 12% in the past seven days. Over the past month, the value of the cryptocurrency has gained 26%.
The chart below shows the current price trend over the past five days.
The price of Bitcoin seems to have surged up over the past few days | Source: BTCUSD on TradingView