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

• With the crypto greed index at elevated ranges, asset costs might turn out to be inflated, and market volatility might enhance. 
• Nonetheless, 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 might push costs increased, 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 buyers gauge market feelings, which might closely affect shopping for and promoting selections. Knowledge 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 buyers are nonetheless aiming for extra upside, excessive greed might sign overconfidence, rising the danger of a market correction, as seen through 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 buyers determined to exit the market after securing huge positive aspects 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 analogous market sentiment, the query arises : Does this sign that BTC is due for a correction, particularly with 100% of holders presently 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 part, it’s clear that buyers are optimistic about Bitcoin’s long-term potential. 

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

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

This confidence, nonetheless, wants to carry regular within the coming days to stop BTC from slipping under the essential $80K degree.

Supply : CryptoQuant

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

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

Nonetheless, the mixture of strong whale accumulation, new bulls coming into the market, a derivatives panorama dominated by longs, and a excessive greed index suggests {that a} high should still be distant.

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