Lorenzo Stroe
Independent Analyst
- Cryptocurrency investors have reached levels of greed not seen since June 2019.
- High greed indicates that the market needs to see a correction.
The cryptocurrency market has experienced a massive bull rally that started around October 1. Since then, the total market capitalization reached $583 billion at its peak from a low of $340 billion. On November 26, the entire market suffered a steep correction to $484 billion but managed to recover quickly in the next three days. It seems that levels of greed have remained extremely high, nonetheless.
The crypto market needs a steeper correction to remain healthy
Nothing goes up forever, and cryptocurrency investors certainly know this fact. The Crypto Fear & Greed Index has been an accurate tool to predict upcoming periods of consolidation for the market. In the past, investors have been extremely greedy on several occasions.
Crypto High Greed compared to market capitalization chart
Every time the index reached high or extreme greed for an extended period of time, the total market capitalization suffered significant blows. This metric has been accurate since February 2018.
The index is now showing extreme greed since practically the beginning of November, which indicates that a correction might happen soon. Furthermore, it seems that some technical indicators have turned bearish for Bitcoin as well.
BTC/USD monthly chart
On the monthly chart, the TD Sequential indicator has presented a sell signal for the first time since the all-time high in December 2017. The last call had a ton of follow-through and predicted the top of Bitcoin very accurately. Additionally, despite Bitcoin price breaking the all-time high on some exchanges, the potential of a double top is still present.
Although some sell signals weren’t validated in the past, considering the overextension of the Crypto Fear and Greed Index, it seems likely for the last signal to be confirmed, which could potentially drive Bitcoin price to a 30% correction.
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