Following the recent rally in cryptocurrencies, significant price increases have been observed in Bitcoin and many altcoins. During this period, the level of greed in the cryptocurrency sector reached the highest levels seen in the 2021 bull market. Investors and traders have a strong belief that the bull market has started before 2024 and that expectations are high.
The Fear and Greed Index provides information about the emotional state of the general sentiment in a particular market, using data obtained through technical indicators. Fear rises under weak momentum, bearish indicators, and high selling pressure, while greed emerges during strong momentum and increasing demand.
Extreme fear usually indicates situations of overselling, while extreme greed can often signal overbuying conditions. Both scenarios described can be triggers for a reversal in trend and sentiment.
In particular, according to the index published by Alternative, the crypto ‘Greed’ level hit a peak of 74 on November 30th, which is the highest level in recent years. On the date the article was written, December 9th, the index maintained its strength in the greed zone at 73.
As seen in the graph above, the index has a structure that includes ups and downs. Independent peaks do not appear to be directly associated with a bull market. Moreover, if Greed (or Fear) is consistently found in a certain area, it may indicate a notable correlation according to a more reliable indicator’s lead.