The “Fear and Greed Index” tracked by CoinMarketCap surged past the 80 mark yesterday (August 25), jumping to 81—officially signaling that the market is in a “state of extreme greed.” This is the first time since the peak of the 2024 year-end bull market.
This is the only time on record that the trend has jumped directly from “extreme fear” to “extreme greed.” What does this unprecedented emotional reversal really mean?
Who is behind the full cycle of bull and bear in half a year?
Do you remember February this year? The market was full of wailing. The index fell to 5—comparable to the despair seen during the 2022 FTX collapse. At the time, the source of panic wasn’t coming from within the crypto sector; it was a macro black swan from geopolitics. For a while, it was widely rumored that Trump might take military action against Iran, which would drive up oil prices and inflation expectations, making a rate cut by the Fed seem unlikely. Tech stocks and crypto promptly plunged. During the panic, Bitcoin was also hammered down from its highs.
Yet, only six months later, the whole tone flips 180 degrees. What drives this wave of greed right now is the simplest and most brutal logic: price. Just yesterday, a single strong bullish candle sent Bitcoin surging and it reclaimed the $80,000 mark; during the session, the intraday high even touched $81,270. The shorts were complaining, and within one night, more than 90,000 people were liquidated across the entire market, with liquidation losses totaling as much as $650 million.
Is 81 a top alert, or an acceleration signal?
Historically, the “extreme greed” signal is like a crafty riddle—sometimes it warns of risk, and sometimes it’s used to endorse the trend.
Bears say: This is a “top-picking / sell-the-top” warning light.
Don’t forget the lesson from November 2024. Back then, market sentiment was just as exuberant—the index even climbed to around 78, nearing the “extreme greed” range. So what happened? After that, the market went through a brutal bloodbath: Bitcoin plunged 30% within a month, dropping from roughly $126,000 historical highs to a low of about $85,000.
Bulls say: This is a “trend confirmation” rally horn.
However, extreme greed—especially in the early stages of a trend—can actually be a positive signal. A report from K33 Research shows that when an index breaks above 90, the market’s average returns over the following few weeks and one month are indeed positive. For example, when the index reaches 95, the average return over the next month is as high as 36%. More historical data also indicates that the greed range of 80–90 is likely to correspond to a “one-way uptrend” market. In their view, this is more like “momentum confirmation” rather than a signal to reduce positions.
The upcoming Jackson Hole annual meeting of global central banks. The newly appointed Fed chair, Kevin Wosch, will deliver a keynote speech. Will he release dovish signals of “continued observation,” effectively giving a tacit nod to the market’s celebration? Or will he, to protect the central bank’s credibility, reaffirm a hawkish stance and pour cold water on the market? Every sentence he speaks could become the fuse that ignites the next round of market action.
