Greed among cryptocurrency investors soars to the highest level ever recorded

  • The cryptocurrency fear and greed index is at record highs as a massive correction looms.
  • The TD Sequential indicator's Sell signals on the 3-day and weekly charts suggest that the headwind on Bitcoin is intensifying.

The cryptocurrency market has been on a consistent and remarkable rally since the beginning of November. Most cryptoassets are trading at levels not seen since 2017 and early 2018. Bitcoin, for instance, rocked to $19,500 before retreating to slightly under $18,000.

Bullish markets are usually characterized by uncalculated speculation and even greed. As the prices rally, investors tend to enter the market, hoping that the bull cycle will continue to undefined levels, as discussed earlier this week. Sudden price corrections are also common and leave many investors bleeding profusely.

Cryptocurrency participants are overwhelmingly bullish

The cryptocurrency fear and greed index (CFGI) by is currently at record highs, suggesting that the traders and investors in the crypto market are incredibly bullish. This index functions due to the emotional behavior of participants in the cryptocurrency market.

Investors get greedy during bullish markets, mainly due to the fear of missing out (FOMO). On the other hand, people panic sell their assets when the crypto market begins to dot red.'s CFGI has been designed to crunch the numbers on a scale running from zero to 100. Zero represents "extreme fear" and suggests that prices are about to start pumping, offering an opportunity to buy. Similarly, 100 represents "extreme greed," implying that the market is about to correct.

CFGI chart

Crypto CFGI chart

Looking at the CFGI from January 2018, towards the end of the parabolic rally in 2017, the agreed level of 63 in February 2018 saw the entire market start to fall. Bitcoin dived to levels close to $5,800 before a recovery came into the picture supported by a CFGI fear value of 22. The flagship cryptocurrency soared to highs above $10,000 towards the end of April 2018.

Consequently, the index hit a record high in June 2019 (extreme greed: 95). At the time, Bitcoin had recovered from the lows recorded in November 2018 near $3,100 and exchanged hands roughly at $13,800.

A correction ensued, sending Bitcoin to the March 2020 lows at $3,800. The 2020 low was marked by a CFGI extreme fear value of 11. This presented a massive buy opportunity across the market, culminating in the ongoing bull cycle.

CFGI chart

CFGI historical chart

At the time of writing, the CFGI extreme greed value is holding the ground at 95. The metric implies that a correction is likely to come into the picture. Therefore, there is a need for investors to proceed with caution to avoid massive losses.

Bitcoin is on the verge of a significant correction

The TD Sequential indicator has presented a couple of sell signals on the 3-day and weekly charts. The signals manifested in green nine candlesticks are likely to be validated, especially now that Bitcoin has been rejected from $19,500.

BTC/USD price chart

BTC/USD 3-day and weekly charts

The flagship cryptocurrency has slipped under $18,000 after failing to find higher support. Selling pressure is likely to increase, exclusively with the CFGI at all-time highs.

Investors are likely to start cashing out in a bid to take profits before BTC drops further. Panic selling could be the final blow to Bitcoin, as it would drive prices to the 100 Simple Moving Average currently at $12,000.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Cardano Price Forecast: ADA targets 900% bull rally, but it must clear $0.33 first

Cardano had a significant rally towards $0.355 at the beginning of 2021. After a notable dip to $0.228, bulls bought it and managed to push Cardano price to $0.33 again before a small rejection.

More Cardano News

Ethereum price aims to flush out doubters before the ultimate breakout to $2,000

Ethereum bulls bought the dip on January 11, pushing the digital asset from a low of $915 towards $1,256. The smart-contracts giant has been outperforming Bitcoin in the past 24 hours despite the negativity seen on social media.

More Ethereum News

XLM Price Prediction: Stellar consolidates ahead of a 30% move

XLM price trades at $0.291 at the time of writing after a healthy consolidation after hitting a 2021-top at $0.411. There is a high chance that XLM is about to see a massive breakout or breakdown within the next 24 hours.

More XLM News

Bitcoin Weekly Forecast: BTC price faces extreme volatility ahead of a new all-time high

Bitcoin had a wild run this week, dropping from a high of $41,350 to a low of 30,420 in less than 48 hours. The panic sell-off was stopped on its tracks at the 26-EMA on the daily chart as bulls quickly bought the dip and created a V-Shape recovery pushing BTC towards $40,100 again. 

More Bitcoin News


Bitcoin Weekly Forecast: BTC price faces extreme volatility ahead of a new all-time high

Bitcoin had a wild run this week, dropping from a high of $41,350 to a low of 30,420 in less than 48 hours. 

Read the weekly forecast