Yesterday, Bitcoin broke up through resistance at $10,500 and in short order, rocketed another $1000 to a high of $11,419 on Coinbase Pro. Just as fast as the cryptocurrency itself climbed, the crypto market fear and greed index spiked to “extreme greed.”
Greed has now reached the highest level in the crypto market in over a year, hitting a level that hasn’t been seen since past Bitcoin tops. Could the rapid increase in extreme greed be a signal that the current pullback is a prelude to a deeper correction? Or will greed turn into irrational exuberance and push Bitcoin and the rest of the space back towards former highs?
Bitcoin Breakout Rally Leads Market Sentiment Towards Irrational Exuberance In One Day
Cryptocurrencies like Bitcoin have spent the last several years in a bear market, following the crypto market bubble bursting in 2017. It has only been recently that the greater crypto market appears to be ready for a comeback.
The conditions are currently perfect. Entrepreneurs, investors, and analysts alike suggest the limited supply of these assets can make them a great hedge against the dollar.
During the multi-year drawdown, supply heavily outweighed demand, but that’s since been turning around. And coinciding with that shift in supply and demand dynamics is a dollar that’s slowly losing its value.
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The more money the Fed prints, the weaker the dollar gets. At the same time, scarce assets like cryptocurrencies and precious metals have been thriving.
It’s helped Bitcoin this week finally break above $10,500, gold achieve a new all-time high, and the broader crypto market has been pumping left and right.
The sharp markup and profits generated from a single-day $1,500 rally in Bitcoin send the crypto market fear and greed index rising just as sharply as the asset’s price itself.
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