Market sentiment 'Yin and Yang Chart': What does the continuous break of the encryption panic and greed index above 80 mean?

After most 'extreme greed' states, BTC tends to surge towards higher prices.

Author of the article: 0x9999in1

Source of the article: MetaEra

According to Alternative.me data, on November 19th and November 19th, the Cryptocurrency Fear and Greed Index rose to 90, indicating that the market is still in a "extreme greed" state. Since November 12th, both the Cryptocurrency Fear and Greed Index have not dropped below 80, and the market sentiment is still high.

Crypto Assets Panic and Greed Index

The Cryptocurrency Fear and Greed Index contains multidimensional indicators and is the main Cryptocurrency sentiment index created by the investment analysis website Alternative.me. The index aims to measure the general market sentiment towards encryption assets. The specific indicators include volatility (25%) + market volume (25%) + social media popularity (15%) + market surveys (15%) + BTC's proportion in the overall market (10%) + Google Trends analysis (10%).

The range of measurement of the Cryptocurrency Fear and Greed Index is 0-100, with lower scores indicating more fear and higher scores indicating more greed. 0-24 points represent 'extreme fear', which means that investors are dumping heavily and exiting the market. 25-49 points represent 'fear', which means that a significant number of investors are dumping, while market interest remains low. 50-74 points represent 'greed', which means that a large number of purchases are occurring, causing prices to pump. 75-100 points represent 'extreme greed', indicating that the market is very hot, and a market 'bubble' may soon burst.

During times of panic, investors may want to establish their Crypto Assets positions at a lower cost, while others may be afraid to enter the market. Similarly, in times of greed, investors may want to delay buying new Crypto Assets or even sell some Cryptocurrency when the price is still high.

However, it is worth noting that the index mainly follows Bitcoin, and pays less attention to other encryption assets, so the Cryptocurrency Greed and Fear Index has certain limitations, and it is not difficult to fully represent the user sentiment of the entire crypto market.

The trend of BTC under extreme greed

Combining the current BTC market situation, since BTC broke new highs repeatedly from $70,000, it has been Sideways at around $90,000 in recent days, and the corresponding Cryptocurrency Greed and Fear Index remains high, never falling below 75.

Using history as a mirror, let's take a look at whether the past Bull Market phase has some correlation with the Crypto Assets greed and fear index. Since the Crypto Assets greed and fear index was proposed in January 2018, according to current statistics, the time when it is in an 'extremely greedy' state and the value is 80 or above are June 2019, December 2020, January and February 2021, October 2021, May 2024, and November 2024.

During these periods, each time corresponds to the mid-to-early stage of BTC breaking through new highs. After most extreme greed states, BTC will sprint towards higher prices. Currently, BTC has broken through $97,000, creating a historical new high, and is less than $3,000 away from the revolutionary threshold of $100,000. According to the historical pattern of the Cryptocurrency Fear and Greed Index, perhaps within the next 1-2 months, BTC will firmly stand at the $100,000 threshold.

The Cryptocurrency fear and greed index is indeed a very objective tool that reflects market sentiment, allowing users to perceive the investment emotions of others in the market clearly and accurately. However, at this time, the decision to invest and the act of dumping are often influenced by one's own emotions. If a Black Swan Event happens to occur, the Cryptocurrency fear and greed index will instead affect investors' decisions and judgments. How to make good use of these encryption investment vehicles is often an important topic to explore in the Web3 world.