Data shows that the Bitcoin market sentiment has entered extreme greed territory after the cryptocurrency reached a new record above $111,000. The Bitcoin Fear and Greed Index has recently risen. The 'Fear and Greed Index' is an indicator created by Alternative that informs us about the sentiment of average traders in the Bitcoin and cryptocurrency markets in general. The index uses a numerical scale from 0 to 100 to represent sentiment. Values above 53 indicate greed among investors, while values below 47 indicate fear. The index between these two limits implies a neutral mindset. In addition to these three main zones, there are also two 'extreme' regions called extreme greed (above 75) and extreme fear (below 25). Currently, market sentiment is in the first of these two regions, according to the latest value of the Fear and Greed Index.
Historically, extreme sentiments have been very important for Bitcoin and other digital assets, as this is where major tops and bottoms tend to form. The relationship is inverse, meaning that an excessively optimistic atmosphere makes tops likely and an excess of despair forms bottoms. Some traders exploit this fact to time their buying and selling. This trading technique is known as contrarian investing. The famous quote by Warren Buffet summarizes the central idea: 'be fearful when others are greedy and be greedy when others are fearful.' With Bitcoin sentiment returning to the extreme greed region, it is possible that followers of this philosophy may be starting to consider exiting. That said, the Fear and Greed Index currently has a value of 'only' 78. For comparison, the top in December occurred around 87 and in January at 84. At the beginning of the rally, the index peaked much higher at 94 in November. Thus, it is possible that the current market is not yet so overheated in terms of sentiment, as long as investor demand does not decrease. However, it remains to be seen how Bitcoin and other cryptocurrencies would evolve under this extreme greed.
Speaking of demand, whales have just made a significant amount of withdrawals from the Binance platform, as pointed out by CryptoQuant community analyst Maartunn in a post on X. The indicator shown in the graph is the 'Exchange Netflow', which informs us about the net amount of Bitcoin that is entering or leaving wallets associated with a centralized exchange, which, in this case, is Binance. Clearly, Binance's Exchange Netflow has observed a large negative value, implying that investors transferred a notable amount of coins out of the exchange. More specifically, the net outflows to the platform were 2,190 BTC or about $237 million. This may potentially indicate demand from large investors to hold the cryptocurrency in self-custody wallets.
