Bitcoin’s greed index hits 72, is a correction looming?

• Bearish sentiment around BTC has been on the rise. 
• Bitcoin’s growth rate slowed down in the last 24 hours. 

As the crypto market initiated its bull rally, investors’ expectations, especially with Bitcoin [BTC], skyrocketed. Their hopes paid off with time, as the value of the king coin went above the $35,000 mark for a while. 

Read Bitcoin’s [BTC] Price Prediction 2023-24

However, high confidence is often to be considered a bearish indicator, as it increases the chances of a price correction.

Bearish sentiment around Bitcoin grows

According to CoinMarketCap, Bitcoin’s value surged by more than 12% over the last seven days. At the time of writing, it was trading at $34,323.71 with a market capitalization of over $670 billion.

Not only did the coin’s price increase, but its 24-hour trading volume also went up, which is generally considered to be a bullish sign. However, BTC‘s growth momentum came to a halt as the price only moved marginally over the last 24 hours until press time.

This happened at a time when Bitcoin’s fear and greed index hit a value of 72, representing increased greed in the market.

Bitcoin Fear and Greed Index is 72. Greed
Current price: $34,713 pic.twitter.com/iB6JZLk7jg

— Bitcoin Fear and Greed Index (@BitcoinFear) October 29, 2023

The Fear and Greed Index is an indicator that analyzes and generates a number between 0 and 100, where 1 is the indication of extreme fear and 100 is the indication of extreme greed.

Whenever the index goes above 50, the possibility of a price correction increases substantially. Therefore, considering the press time number, the chances of BTC experiencing a price drop seemed high.

Moreover, a closer look at Bitcoin’s metrics revealed that investors had already started selling their holdings at the time of writing. According to CryptoQuant, BTC’s exchange reserve was increasing, pointing out that the coin was under selling pressure.

Bitcoin’s aSOPR was in the red, meaning that more investors were selling at a profit – this suggested a possible market top amidst a bull rally.

Source: CryptoQuant

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Bitcoin investors must practice caution 

In addition to the above metrics, Bitcoin’s RSI was also in an overbought position at the time of writing. This could further increase selling pressure on the coin and possibly result in a drop in its price.

Like the RSI, the Bitcoin Money Flow Index (MFI) was also hovering near the overbought zone, increasing the chances of a falling price trend. However, BTC’s Chaikin Money Flow (CMF) looked bullish as it was rating above the neutral mark.

Source: TradingView