Bitcoin at $81K: Is excessive ‘crypto greed’ a warning for BTC merchants?

• With the crypto greed index at elevated ranges, asset costs may change into inflated, and market volatility could improve. 
• Nevertheless, present key metrics sign a possible BTC short-squeeze to $85K.

With practically all Bitcoin [BTC] holders in revenue, market sentiment teeters between greed and worry. As BTC breaks data with a brand new ATH of $81K, the crypto greed index has reached a 7-month excessive.

This case is fragile, as heightened greed may push costs larger, however a sudden shift in sentiment may set off a swift sell-off.

Crypto greed index exhibits indicators of overvaluation

For context, the crypto greed index helps traders gauge market feelings, which might closely affect shopping for and promoting selections. Information from CoinMarketCap exhibits the market regularly edging towards excessive greed.

Earlier than Bitcoin hit $80K, the market was in a greed place. Whereas excessive greed suggests traders are nonetheless aiming for extra upside, excessive greed may sign overconfidence, rising the danger of a market correction, as seen in the course of the March rally.

In March, as BTC reached the $73K benchmark, the crypto greed index peaked at 90. Because the index signaled excessive greed, many traders determined to exit the market after securing huge positive factors from the rally. Subsequently, the value retraced again to $67K in lower than per week.

Now, with the crypto greed index reaching a 7-month excessive and reflecting an identical market sentiment, the query arises : Does this sign that BTC is due for a correction, particularly with 100% of holders at the moment in revenue?

Bulls are betting on additional upside

With BTC leaping over 2% from the day gone by’s shut, regardless of coming into a high-risk section, it’s clear that traders are optimistic about Bitcoin’s long-term potential. 

This optimism is mirrored within the excessive crypto greed index, which at the moment signifies a stronger-than-usual risk-taking conduct available in the market.

Put merely, traders could also be overlooking potential dangers to chase outsized returns, suggesting a willingness to remain invested regardless of indicators of overvaluation.

This confidence, nevertheless, wants to carry regular within the coming days to stop BTC from slipping beneath the essential $80K stage.

Supply : CryptoQuant

Within the derivatives market, bulls are at the moment dominating short-sellers, reinforcing the crypto greed index. Whereas bullish exercise stays sturdy, it nonetheless falls in need of the depth seen in the course of the rally in March.

Learn Bitcoin’s [BTC] Worth Prediction 2024-25

Nevertheless, the mix of sturdy whale accumulation, new bulls coming into the market, a derivatives panorama dominated by longs, and a excessive greed index suggests {that a} prime should be distant.

This creates a good setup for a possible quick squeeze, the place BTC may surge to $85K earlier than month’s finish as investor optimism and risk-taking conduct attain unusually excessive ranges.