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The Bitcoin price has once again pushed above the $100,000 level after three consecutive days of price increases. Particularly, Bitcoin’s return above $100,000 comes on the back of a 12.5% increase after it bounced off the $90,000 support level on Monday, January 13.
As expected, this positive momentum with Bitcoin has flowed into other cryptocurrencies. Major altcoins have mirrored Bitcoin’s surge, contributing to a notable increase in the overall cryptocurrency market capitalization A byproduct of this crypto market cap increase has been a simultaneous movement in the Crypto Fear and Greed Index, which is now moving to the Extreme Greed threshold.
Fear And Greed Index Moves To Extreme Greed
The Crypto Fear And Greed Index is a popular index that measures market sentiment on a scale of 0 to 100. The scale is classified from the lower end of extreme fear up to the higher end of extreme greed and a neutral zone in the middle. Periods of extreme fear are characterized by oversold conditions and bearish market sentiment, often presenting buying opportunities.
On the other hand, when greed dominates, it often signals overbought conditions. It also opens up a possibility that a correction or crash might be close, especially if there is a quick switch from neutral to extreme greed.
The entire crypto market cap has witnessed steady inflows this week. Data from CoinMarketCap shows that the total cryptocurrency market cap began the week around $3.14 trillion. This figure has risen to $3.57 trillion at the time of writing, representing an inflow of about $430 billion in the past five days. This 13.5% jump points to increased optimism as Bitcoin and a few major altcoins are now looking to return to new highs.
These recent inflows into the crypto market have seen the index moving from a neutral threshold at the beginning of the week to a greed threshold at the time of writing. What’s particularly striking is the speed at which sentiment has shifted. As of now, the index is nearing the extreme greed threshold, a zone that suggests the market could be entering overbought territory.
Where Does The Bitcoin Price Go From Here?
The market’s ability to maintain its course and maintain a sentiment of greed hinges on Bitcoin’s ability to maintain a price above $100,000, given its dominant position in the market. Should the bulls succeed in defending the $100,000 mark and establishing it as a solid support level, this could mitigate the risk of extreme greed leading to overbought conditions and a subsequent downward correction.
A support above $100,000 would essentially reset the Crypto Fear And Greed Index around this level. Failure to hold above $100,000 could validate the historical trend that an extreme greed sentiment usually leads to a crash.
At the time of writing, Bitcoin is trading at $101,420 and is up by 1.6% in the past 24 hours.
