Bitcoin (BTC) Nears Correction as Market Sentiment Gets Overly Greedy

Bitcoin (BTC) has been on a roll since the 2024 US election. This was especially due to cryptocurrency advocate Donald Trump clinching back the presidency.

Bitcoin (BTC) price action has been buzzing since the 2024 US election, particularly driven by cryptocurrency advocate Donald Trump clinching back the presidency. Promises of a crypto-friendly regime and the passage of new laws favoring BTC fueled optimism, propelling the coin toward a series of new all-time highs.

With institutional adoption growing exponentially and a friendlier crypto regulatory climate on the horizon in the US, Bitcoin’s rally is undoubtedly set to continue. However, key indicators suggest that a potential correction may be approaching.

Bitcoin Market Sentiment Gets Overly Greedy

Interestingly, the Fear & Greed Indices from popular platforms like Alternative.me and CoinMarketCap have synchronized their dials at 83. Based on a 0 to 100 metric where the lowest indicates an overly cautious market and the highest displays aggressive investor behavior, the latest score is treading at the “Extreme Greed” territory.

At this point, FOMO (fear of missing out) is likely influencing the buying spree in the market as Bitcoin and other altcoins are either experiencing new record highs or taking significant recoveries from their previous losses during the long crypto winter. The heightened investor interest in these crypto assets is a sign of increased adoption, but an extremely greedy trading behavior in the consensus normally marks a possible correction coming up.

In a nutshell, the Crypto Fear & Greed Index puts forward the following assumptions:

RSI Readings Treading the Overbought Zone

Bitcoin seems to be gearing up toward establishing a strong foothold of the $90K line. However, the 14-range Relative Strength Index (RSI) readings in the one-day to one-week charts are hovering above the 70 line.

A score of above 70 means an asset is already overbought or overvalued. It’s usually a precursor to a pullback or trend reversal.

On the other hand, the trend might merely position Bitcoin toward a pullback as the prime crypto asset has not yet exhausted its climb due to the euphoria surrounding the upcoming crypto-friendly administration in the US. In this case, the event could present a good buying opportunity for BTC investors before prices would eventually blow off the roof.