Bitcoin price rises above $82,000, triggering “extreme greed” in the crypto market

With the Price of Bitcoin Optimism among crypto investors rose to a new all-time high of over $82,000 on Monday morning and has reached extreme proportions.

A key indicator of market sentiment, the Crypto Fear and Greed Index, rose to an “extreme greed” reading of 78 out of 100 on Sunday – marking the second-highest reading this year after the peak of 82 in March. On Monday morning it had fallen to a value of 76.

The dramatic change in market sentiment has caused the index to slide from neutral (49) just 30 days ago to its current elevated level. Typically, it indicates a market environment characterized by increased optimism and potential risk-taking behavior by investors.

A rise in mood coincides with Bitcoin It jumped above $80,000 for the first time on Sunday, according to CoinGecko data, and hit a new all-time high above $82,100 on Monday morning, up 3.6% on the day.

Historical data shows a steady upward trend in both price and sentiment since 2018, indicating a mature crypto market.

Ethereum According to CoinGecko data, Bitcoin also posted relative gains, reclaiming $3,000 last week and extending that rally to highs of $3,241 on Monday morning.

Meanwhile, meme coins such as Floki and Elon are also recording peak values Dogecoin reached its highest price in three years.

Crypto prices and the US election

The broader market enthusiasm comes amid changing geopolitical conditions as Donald Trump secures a second term as U.S. president, in what billionaire investor Mike Novogratz called the “most important day” for crypto. Trump made crypto-friendly promises a pillar of his campaign as the market expected greater regulatory clarity following his election.

“Clearer rules and a friendlier attitude toward crypto companies have the potential to increase investor confidence and encourage further innovation and mainstream adoption of virtual digital assets,” Vishal Sacheendran, head of regional markets at Binance, said in a statement Decipher.

Fear, greed and market movements

While the Bitcoin Fear and Greed Index is based on several Bitcoin-specific weighted components, it also serves as a general indicator for the broader crypto market.

According to data from Coinglass, the Crypto Fear and Greed Index shows a consistent pattern following Bitcoin price movements, with significant market corrections typically occurring within one to three weeks of reaching “Extreme Greed” territory.

Extended periods in the Extreme Greed Zone (75-100) have historically preceded market corrections, although the timing and magnitude of these moves remain unpredictable.

The most notable case occurred in February 2021, when the index reached a high of 95, before Bitcoin hit $64,000 in April 2021 and fell to $30,000 in the three months that followed. Data from the index shows that market sentiment has fallen to extreme lows of 10 at this point.

Coinglass data also suggests that over $123 million worth of Bitcoin short positions were liquidated in the last 24 hours, with the price increasing by 3.6% over the same period.

While there is often a strong correlation between price movements and sentiment, the relationship may not always be direct. Market volatility and other external factors can influence sentiment outside of price movements and occasionally result in divergences.

“Based on this data alone, certain risks have accumulated in the short-term market as BTC prices have reached new highs,” explains Willy Chuang, COO at Woo X.

“Historically, the Fear & Greed Index can reach as high as 90 during extremely bullish market conditions; currently, at 76 years old, it has entered a risk phase,” Chuang said Decipherand added that a slide to lower prices was “inevitable in the future as there is a continuous release of risks” during the uptrend.