Bitcoin’s market sentiment has transitioned out of the “extreme greed” territory for the first time since the “Trump pump” rally commenced in November. This adjustment could provide Bitcoin with the necessary breathing space for further advancement.
As per the pseudonymous on-chain analyst Dark Fost, the phase of “extreme greed” denoted an overheated market and a possible retracement. Fost attributes this to the cryptocurrency’s drop from $108k to around 90k.
A potential setup for a consistent upward trend in Bitcoin?
Moreover, the surge in market interest towards Bitcoin, as indicated by Google Trends, notably decreased as the asset slipped below the $100k mark.
Typically, a spike in Google Trends is associated with euphoria and potential market corrections or peaks.
Based on these observations, Dark Fost suggested that the current trends could pave the way for Bitcoin to grow further in the short run. He remarked,
“Although the overall sentiment remains positive, the interest from potential new participants remains relatively subdued, which could result in the continuation of the bullish phase in the medium term.”
This sentiment was echoed by the True MVRV (Market Value to Realized Value) metric, which is utilized to determine whether Bitcoin is overvalued and to monitor the market cycle.
This metric has accurately identified previous local and market cycle peaks. Notably, the tops in March and December 2024 were triggered when the metric hit 2, with a surge to 4 indicating a cycle peak in most cases.
Currently, the metric stands at 1.7, signifying it is far from 4, which suggests that Bitcoin’s cycle peak is not imminent.
Another indicator of the cycle peak, the Pi Cycle top, has yet to signal the current market peak. This metric has historically indicated peak market points when the 111-day moving average intersected with the adjusted 350-day moving average.
In conclusion, Bitcoin’s movement away from “extreme greed” could be viewed as a positive development, setting the stage for sustained and substantial growth in the medium term. The potential for an uptrend was further supported by key indicators of market cycle peaks, which have not yet signaled an impending peak for the cryptocurrency.