【Extreme Greed Index Doesn’t Necessarily Mean an Imminent Crash: In a Bull Market, Sentiment Can Stay High for a Long Time】
When the Fear & Greed Index is in the “Extreme Greed” range, it doesn’t mean the market is about to reverse. In a strong bull market, the crypto market can remain in greedy or extreme greed readings for weeks or even months, while prices continue to rise. At the end of 2020, when the Fear & Greed reading was near 95, BTC was still below $20,000; months later, the price broke above $50,000. During 2020 to 2021, there were multiple instances where sentiment was extremely optimistic, yet prices continued to reach new highs. This index measures the strength of market sentiment, not whether the trend has ended. Extreme greed can serve as a warning signal, but in a real bull market, it may also simply reflect strong momentum and a clear consensus. Key things to watch next: whether this reading can form an effective top signal via divergence with price, or whether it continues to accompany price making new highs.
When the Fear & Greed Index is in the “Extreme Greed” range, it doesn’t mean the market is about to reverse. In a strong bull market, the crypto market can remain in greedy or extreme greed readings for weeks or even months, while prices continue to rise. At the end of 2020, when the Fear & Greed reading was near 95, BTC was still below $20,000; months later, the price broke above $50,000. During 2020 to 2021, there were multiple instances where sentiment was extremely optimistic, yet prices continued to reach new highs. This index measures the strength of market sentiment, not whether the trend has ended. Extreme greed can serve as a warning signal, but in a real bull market, it may also simply reflect strong momentum and a clear consensus. Key things to watch next: whether this reading can form an effective top signal via divergence with price, or whether it continues to accompany price making new highs.