Data Shows the Bitcoin Fear & Greed Index Has Remained Outside the Extreme Greed Zone Despite the Price Surge Above $104,000

The “Fear & Greed Index” refers to an indicator created by Alternative that tells us about the average sentiment present among the investors in the Bitcoin and wider cryptocurrency markets.

The cryptocurrency market has seen a great deal of volatility in recent times, and this volatility can be used to gauge the thoughts of investors. One way to measure this is through the use of a “Fear & Greed Index.”

This index is a well-known metric that ranges from 0 to 100 and is used to evaluate the prevailing sentiment among investors in the Bitcoin (BTC) and broader cryptocurrency market. It is calculated by Alternative, which credits DataAnalysis and Blockware Solutions for the index's data.

The index takes into account five major factors to determine the current state of trader mentality. These factors include trading volume, price volatility, market cap dominance, social media volume, and Google Trends.

Each of these five components is assigned a weighting in accordance with their importance. A higher value of one component indicates a stronger presence of the corresponding factor.

To measure the level of fear or greed in the market, the index uses a numeric scale from 0 to 100. Values below 25 suggest extreme fear, while those above 75 imply extreme greed.

When the index reading is 47 or less, it suggests that fear is the dominant sentiment among traders. Conversely, an index value of 53 or more indicates that greed is the primary emotion driving the market.

If the index reading falls between these two cutoffs, it signifies a net neutral mentality among traders, with neither fear nor greed having a stronger influence.

Apart from these three main market sentiments, there are two special regions that denote extremely strong fear and greed. Extreme fear is indicated by an index value of 25 or less, while extreme greed is shown by an index reading of 75 or more.

Here is a snapshot of the latest Bitcoin Fear & Greed Index value:

As such, the Bitcoin Fear & Greed Index has a reading of 70, which is in the Greed territory.

Earlier this month, the trader mentality declined to a neutral level as the price surge took a pause. But with the latest continuation to the rally, the market mood has improved once more.

Interestingly, however, despite Bitcoin approaching its all-time high (ATH), the investors have still not become extremely greedy. If history is to go by, this could actually play into the favor of the asset’s price.

The reason behind this is that the cryptocurrency has often tended to move in a direction that’s opposite to the crowd opinion. The probability of such a contrary move taking place has only gone up the more sure the investors become of a direction, so the extreme zones, where sentiment is the strongest, is where major tops and bottoms have formed.

The Fear & Greed Index still staying out of the extreme greed region could be an indication that an excess of hype hasn’t developed among the investors just yet, so Bitcoin could potentially have more room to run before a top.

Bitcoin briefly managed to cross over the $105,000 level earlier today. However, the crypto seems to have seen a small pullback since then as its price is now back at $103,000.