BTC's Fear and Greed Index has been holding at levels of “extreme greed” since early November. This is a record-breaking period.

A popular indicator assessing the current mood in the cryptocurrency market has dug in the zone of "extreme greed", since the beginning of November, not leaving the maximum values.

Previously, the "fear and greed index" never remained at such high levels for such a long time. According to the creators of the index, such a mood of investors may be fraught with a subsequent correction of the market and a fall in the bitcoin rate (BTC).

Investors are still gripped by greed

Over the past two months, the bitcoin rate has grown by about 80%. According to the statistics of some cryptocurrency exchanges, bitcoin managed to update its historical maximum in early December. This further increased the optimism of the participants in the cryptoindustry, which is clearly confirmed by the dynamics of the "fear and greed index".

Developed to measure market sentiment, the index takes into account many factors, such as price volatility, trend strength, trading volumes, social media sentiment, and BTC's dominance in the crypto market. At one end of the scale, which ranges from 0 to 100, is the Extreme Fear indicator, and at the other end is the Extreme Greed indicator.

The index has not left the zone of "extreme greed" since November 5. This is the longest period of such market optimism in the history of the index.

It is noteworthy that investor confidence did not shake even at the end of November, when the bitcoin rate fell below $16,700. During this short drawdown, the fear and greed index still remained above 86, and at the moment reached 93. Recall that the zone of "extreme greed" starts above 80.

Big cabinets fall loudly?

Lately, the crypto market has really been generous with upbeat news, which has led to high confidence among investors. We are talking now not only about the growth of the bitcoin rate, but also about favorable fundamental factors.

The bullish rally caused a powerful influx of institutions into the market. And also there is a lot of interest in bitcoin from companies such as MicroStrategy, Square, Grayscale and PayPal.

Many heavyweights of the traditional financial market, including Citibank, Deutsche Bank and JP Morgan, have openly expressed their optimism about the prospects for bitcoin in recent years. In addition to financial institutions, the crypto space has attracted legendary investors such as Stan Druckenmiller and Paul Tudor Jones.

However, despite all this positive, the index of fear and greed warns about possible overbought BTC, at least - in the short term. According to the developers of the index, such excessive greed may be an indication of the forthcoming correction.

Let us remind you that this is exactly the position taken by one of the most famous traditional investors, Warren Buffett, who recommended “to be afraid when greed reigns in the market, and to be greedy when everyone else is afraid”.

However, the fear and greed index appeared only in February 2018. It did not capture Bitcoin's previous bull run to $20,000 in December 2017, so we cannot draw any comparative historical parallels to that period. However, many market participants are still confident that the current rise in prices is taking place in qualitatively different conditions compared to the previous rally.