Saturday, June 3rd, 2023

Crypto: From Extreme Fear to Extreme Greed in a Week

Bitcoin has overcome the important psychological and technical level of $50K and continues to grow. Only in the last day BTC has shown an increase of 6% and is trading around $55K. During the week, Bitcoin shows an increase of 26%. Another important psychological indicator is overcoming the capitalization of Bitcoin over $ 1 trillion. Of course, this figure has symbolic significance, but for many retail investors it is important to see the ability of an asset to overcome psychological resistance.

Bitcoin has risen to highs since May, exceeding $55KBitcoin has risen to highs since May, exceeding $55K

The total capitalization of the crypto market at the moment is almost $ 2.3 trillion. Here we also see a confident overcoming of the round value and continued growth. At this stage of the Bitcoin rally, alternative cryptocurrencies show less significant positive dynamics. However, altcoins are very likely to catch up with the first cryptocurrency after some time.

The total capitalization of the crypto market exceeded $2.3 trillion.The total capitalization of the crypto market exceeded $2.3 trillion.

Often, the demand for alternative cryptocurrencies increases shortly after the suspension of Bitcoin growth. The more expensive Bitcoin is, the more psychologically comfortable altos become to buy, especially for retail investors.

In the meantime, the Bitcoin dominance index shows a fairly noticeable increase, currently at the level of 44.5%. The greed and fear index for Bitcoin and the largest cryptocurrencies has jumped by 56 points since last week to 76 and the “extreme greed” mode, fully reflecting the mood in this market.

The cryptocurrency fear and greed index increased by 56 points in a week, the cryptocurrency fear and greed index increased by 56 points in a week

Fears are growing in the community that a trap for bulls and investors who bought Bitcoin already at the top of the rally may close in the range of $55K-$60K. In the case of such a scenario, we may see a sharp reversal as large investors who entered the asset for $30K-$40K take profits.

Among the main reasons, the statement of the head of the SEC, Gary Gansler, is often highlighted that his office does not intend to ban cryptocurrencies. In addition, the manager of Soros Fund Management confirmed the fact of investment in Bitcoin. It seems that at this stage there are enough similar statements to launch a rally. It is also possible that the current price spike may be the result of manipulation.

Following the achievement of a historical maximum by Bitcoin, many participants in the crypto market predicted a possible reversal towards a broad correction. However, the bears’ attacks were repeatedly repulsed by those who wanted to buy Bitcoin at a discount. As a result, it became clear that the broad growth momentum has not been exhausted and there may be another stage of the rally ahead, which will lead the asset, if not above the historical maximum, then close to it.

In the medium term, it will become clear how fundamentally stable the current stage of the rally is. No matter how bright the current price dynamics may seem, there is a possibility that Bitcoin is now going through an important stage of the crossroads, and there is no unequivocal certainty that the occupied levels will be able to be maintained.