The ‘worry and greed’ index has hit its highest stage since November 2021, when Bitcoin traded at an all-time excessive.
Warren Buffet as soon as stated, “Be fearful when others are grasping, and grasping when others are fearful.”
The Crypto Worry and Greed Index – which tracks market sentiment – is flashing indicators of warning for traders. It topped 79 on Feb. 19, its highest stage since Nov. 2021, when Bitcoin peaked at $69,000, and the index reached 84.
If historical past have been to repeat itself, some draw back might be across the nook.
Bitcoin has been buying and selling across the $52,000 mark for the previous few days amid an intense crypto rally. Ether has additionally barely moved in the present day, altering arms for $2,778, in line with Coingecko. Each are up 20% over the past two weeks.
When the index final reached these ranges in mid-November 2021, the market tanked shortly after, with Bitcoin plummeting 25% from $69,000 to $50,000 within the span of 1 month.
Bitcoin and the broader crypto markets have been heating up as Wall Road establishments accumulate document quantities of capital by means of the not too long ago launched spot Bitcoin ETFs. And with the Bitcoin halving solely months away, euphoria can rapidly settle in.
However historical past exhibits that issues can change on the drop of a hat, regardless of the bullish narrative pervading the business.
In keeping with market intelligence agency Santiment, elevated requires all-time highs on social media, as are being seen at present, have tended to mark native tops previously.
Only a meme
Not all traders take the Worry and Greed Index severely, nonetheless.
“I don’t have a look at the worry & greed index in any respect,” says Alex Kruger, economist and associate at Asgard Markets, an advisory agency specializing in macro, capital markets and crypto.
Kruger instructed The Defiant it’s “simply memetic,” and will solely be used as a proxy in case a dealer doesn’t have the instruments to correctly assess the market. These instruments embrace rates of interest, funding metrics, perpetuals, open curiosity, and a plethora of different indicators, Kruger stated.
In keeping with Kruger, the market “is sizzling,” particularly since Bitcoin surpassed $50,000, main him to suggest traders “de-risk a bit of, however keep very lengthy.”
However Kruger’s recommendation, something above a 74 on the Crypto Worry and Greed Index is taken into account excessive greed – prompting merchants and traders to proceed with warning.
Even perhaps heed Buffet’s recommendation.
