Greed Index Hits New High, Analyze the Market Sentiment and Direction Behind It

2024-07-30, 08:23

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![](https://gimg2.gateimg.com/image/article/17223272241690791857hotspot.jpeg)
## [TL；DR]: 
As the negative effects of Mt.Gox debt repayment and the German government's sale of <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> gradually fall, as well as Trump's positive statement at the Bitcoin conference, Bitcoin prices are gradually recovering and rising due to market sentiment.

The Fear and Greed Index has been greedy for two consecutive weeks and is about to enter an extremely greedy state.

As macro factors and traditional institutional funds increasingly influence the price of BTC, this emotional fluctuation must quietly become milder.

## Introduction
The recent panic and greed index rose from a low of 25 to 74 on Monday, and it has been in a greedy state for two consecutive weeks. As bullish sentiment continues to recover and improve, this article will explore in depth what market codes are hidden behind the market.
 
## The Greed Index Continues to Rise, Does it Reach its Peak or Continues to Rise?
As the negative effects of Mt.Gox debt repayment and the German government's sale of Bitcoin fall, the price of Bitcoin has begun to gradually recover and rise. The panic and greed index is also on the rise the past two weeks, indicating a return of bullish sentiment in the market.

As shown in the figure below, as of the beginning of this week, the market fear&greed index has climbed to a recent high of 74, and the market is in a greedy state, just one step away from quarterly greed.
 ![](https://gimg2.gateimg.com/image/article/17223274281.jpg)
Source: coinglass
 
The Fear & Greed Index, developed by CNN Money, measures the greed and fear emotions of stock market investors. It was later introduced into the <a href="/price" target="_blank" class="blog_inner_link">crypto market</a> to quantify crypto market behavior under emotional conditions.

Generally speaking, when the market rises, people become greedy, leading to FOMO (fear of missing out). In addition, people often sell their tokens out of irrational reactions when they see red numbers. By referring to the Fear&Greed Index, people can avoid their emotional overreaction based on two simple assumptions:
Extreme fear may indicate excessive investor concern and a buying opportunity.

When investors become too greedy, the market needs to adjust.

In terms of design principle, the threshold for this indicator is set to 0-100, including indicators: volatility (25%)+market trading volume (25%)+social media popularity (15%)+market research (15%)+Bitcoin's proportion in the entire market (10%)+Google keyword analysis (10%).

It is not difficult to see from the above that the market is currently greedy. Although this does not mean there will be a downward correction in the future, it is not the best opportunity to buy long.
 
## Trump Makes Positive Statements at Bitcoin Conference, Boosting Market Sentiment to Be Bullish
When it comes to the external background of Bitcoin's recent strong rise, we cannot ignore the series of positive speeches made by former US President and current presidential candidate Trump at the 2024 Bitcoin Conference. These speeches greatly stimulated the market's bullish sentiment towards Bitcoin and a series of PolitiFi tokens.

At the 2024 Bitcoin Conference, Trump extensively elaborated on his positive stance and future policy plans regarding cryptocurrencies, especially Bitcoin. He emphasized the need for the United States to maintain a leading position in cryptocurrency, viewing Bitcoin as a symbol of freedom and sovereignty, and promised to promote the United States as the capital of cryptocurrency after being elected.
 ![](https://gimg2.gateimg.com/image/article/17223274692.jpg)
Source: CryptoPotato
 
Trump plans to support crypto mining by increasing energy investment and developing environmentally friendly power generation methods, and promises to dismiss the current SEC chairman, establish a crypto advisory committee, and prevent the issuance of central bank digital currencies to protect the status of the US dollar.

He firmly believes that the market value of Bitcoin will surpass that of gold, and plans to establish a national strategic Bitcoin reserve to retain government-held Bitcoin. He also promises to create a favorable environment for the crypto industry, including retaining related jobs and promoting the reduction of sentences for the founders of the Silk Road.

In short, Trump has continuously issued a series of friendly policies to win over crypto voters, promising to end the current government's anti-crypto stance and demonstrating that he will be a president who supports innovation and Bitcoin.

It is worth noting that after Trump's speech at the Bitcoin 2024 conference, the volatility of Bitcoin DVOL dropped from 67 to 53, and a group of Trump concept tokens also experienced a significant decline, which seems to indicate that the market is starting to "buy the rumour, sell the news."
 
## Bitcoin Hits $70,000, Bull Returns Quickly?
With the index rising to 74 and the market in a greedy state, Bitcoin once again hits $70,000. Does this indicate that the market is about to enter another explosive bull market? We need to analyze rationally.

According to a report by CoinGecko in early March this year, the crypto market has been in a state of fear for most of the past six years (2018-2024) (54.7%), indicating market volatility and uncertainty.
![](https://gimg2.gateimg.com/image/article/17223275373.jpg)
Note: The data for 2018 is only available from February 1, and the data for 2024 ends on March 6.
Source: CoinGecko

It is obvious that greed is dominant during bull markets; for example, in the 2021 bull market, greed accounted for 54.5% when market sentiment was high, driving crypto market value and prices to new highs.

The previous bear market, which lasted for 2022, was characterized by fear, with 343 out of 365 days (94.0%). As we enter this new bull market, there will only be three days of extreme fear in the first quarter of 2023, and no days of extreme greed. Especially from November 2023 to February 2024, the crypto fear and greed index did not show any "fear" sentiment for four consecutive months, indicating a strong bullish atmosphere in the market at that time.

A recent data worth referring to is that on March 5 of this year, the index reached its highest level of 90, indicating a quarterly greedy state. After 9 days, the coin price has temporarily peaked and has been adjusted since then.
 ![](https://gimg2.gateimg.com/image/article/17223275684.jpg)
Source: Alternative.me
 
Looking back at the emotional fluctuations in the crypto market over the past six years, from deep fear to extreme greed, and now to a stable neutral state, all demonstrate the complexity and uncertainty of this emerging market. As macro factors and traditional institutional funds increasingly influence the price of BTC, we have reason to believe that the volatility of the crypto market may become more moderate.

Perhaps the fear and greed index, after turning red and rising, indicates that the market is gradually moving out of boredom and loneliness and towards a more optimistic direction. However, given the cyclical nature of the crypto market, investors should remain cautious and participate rationally.

<div class="blog-details-info">
<div>Author:**Carl Y.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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