- Market Greed Index increased by 7 points since the last reading, driven by factors such as volatility and social media hype
- Historical data suggests high greed levels often precede market corrections
- Spot Bitcoin ETFs have seen seven straight weeks of inflows
The Crypto Fear and Greed Index currently stands at 68, placing it firmly in the Greed zone, which seems to indicate a heightened bullish sentiment. It increased by 7 points since the last reading, driven by factors such as volatility and social media hype. That said, it’s worth noting that historical data suggests high greed levels often precede market corrections.
The index uses various inputs for calculation, which are:
- Volatility – 25%
- Market volume – 25%
- Social media hype – 15%
- Market surveys – 15%
- Bitcoin dominance – 10%
- Google Trends – 10%
Considering the current geopolitical situation between Iran and Israel, along with the risk of Strait of Hormuz disruptions, it might be strange that the Index is rising. However, it’s likely justified (at the very least partly) due to strong institutional presence and the fact that Bitcoin managed to hold above $100k.
This is particularly noteworthy because in the past, similar events caused around a 10% price drop or even more, but this time, after a small dip, Bitcoin quickly recovered.
Also, spot Bitcoin ETFs have seen seven straight weeks of inflows, suggesting that deep-pocket investors are viewing any dip as a buying opportunity and not a reason to panic.
Another interesting metric is that the Bitcoin implied volatility remains under 40 and the VIX (volatility index) around 20, both of which are historically low considering the global setting.
Caution is still advised
While cryptocurrencies are generally doing well despite everything that’s happening in the world, they’ve mostly been consolidating rather than breaking out. This is a tricky situation because it could indicate a pause before a move in either direction.
As data hints, markets are expecting upside, and any disappointment or unfavorable scenario could trigger a quick unwinding. This could be ETF outflows, escalation of the Middle East conflict, and similar.
Overall, the Greed Index at 68 is probably deserved based on institutional support and market stability, but it’s still built on fragile ground, as it’s heavily reliant on ETFs. If anything goes wrong, even temporarily, the sentiment could shift for the worse. Optimism is great, but being disciplined goes a long way, too.
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