Bitcoin price drop in 3, 2…1? Fear & Greed Index nears dangerous record high
Bitcoin (BTC) is all but guaranteed a price drop if one sentiment metric is right about the state of the market.
On Nov. 19, with BTC/USD lingering at $17,500, the Crypto Fear & Greed Index hit 94, nearly matching its all-time high of 95 points out of 100 on June 26, 2019.
Fear & Greed hits “greediest” in 17 months
Compiled used multiple estimates of investor sentiment, the Crypto Fear & Greed Index delivers a normalized score out of 100 to gauge how overbought or oversold cryptocurrency markets really are. The closer the number is to 100, the greater the chance that the market is due for a pullback.
Heavily tied to price action, the index has succeeded in calling price tops with considerable accuracy since its initiation in early 2018.
“The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out),” the developers explain on the metric’s official website.
“Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreations.”
In late June 2019, the index hit its highest level ever — 95 out of 100 — and at press time on Thursday, the record was just a single point higher than current readings.
Cointelegraph Markets analyst filbfilb meanwhile highlighted that 2020’s market structure is “very similar” to 2019.