Fall in sight for Bitcoin? Index of fear and greed reaches dangerous maximum
A reversal of the Bitcoin price may occur if this metric needs to reach the top, as in 2019.
Bitcoin (BTC) is almost guaranteed a price drop if a feeling metric is right about the state of the market.
On November 19, with the BTC/USD pair remaining at $17,500, the Crypto Fear & Greed Index reached 94, almost matching its historic high of 95 points at 100 on June 26, 2019.
4 reasons why Bitcoin’s high remains, despite correction
Index of fear and greed. Source: Cointelegraph Markets, Digital Assets Data
Greed‘ in 17 months maximum
Formed from estimates of investor sentiment, Crypto Fear & Greed Index offers a score of 100 to evaluate overbought or over-sold cryptomino markets. The closer the number is to 100, the greater the chance that the market will shrink.
Strongly linked to price action, the index has succeeded in calling the top prices with considerable accuracy since its inception in early 2018.
„Cryptomarket behavior is very emotional. People tend to get greedy when the market is growing, which results in FOMO (fear of losing),“ the developers explain on the metric’s official website.
„In addition, people often sell their coins in irrational reaction to seeing red numbers. With our Index of Fear and Greed, we try to save you from your own emotional overreactions. ”
At the end of June 2019, the index reached its highest level – 95 out of 100 – and at the time of publication on Thursday, the record was just one point above current readings.
Hold on: Bitcoin option data says $18,500 is not a local maximum
Historical Crypto Fear & Greed Index chart. Source: Alternative.me
Meanwhile, Cointelegraph Markets filbfilb analyst pointed out that the 2020 market structure is „very similar“ to 2019.
Note these two levels if Bitcoin’s price is corrected before $20,000.
Can stronger hands avoid diving?
As published by the Cointelegraph, a series of charts tracking Bitcoin market activity reached all-time highs this week, with its certainly more optimistic impact.
Analysts have stopped considering the current rush, given its „organic“ nature, in the words of statistician Willy Woo, compared to his record highs in 2017.
In principle, Woo and others argue, strong hands are buying the offer this year, while amateurs and speculators remain on the sidelines.
This outlook is confirmed by data showing a large number of currencies coming out of exchanges for cold and other long-term portfolios, as well as whale buying activity.