Analysis of Bitcoin’s Fear & Greed Index Surge to a 4-Year High: Is a Repetition of 2020’s Trend Likely?
The target of $100,000 for Bitcoin [BTC] has spurred the market to reach a level of ‘extreme greed’ in 2020, which was followed by a 50% price correction.
Recent data from CryptoQuant shows that Bitcoin’s Fear and Greed Index (FGI) has reached a peak not seen in 4.5 years, hitting a value of 94.
Interestingly, the current market trend seems to be closely resembling the pattern observed in 2020. The ‘extreme greed’ level of 94 was reached in November 2020.
About three months later, in February 2021, Bitcoin experienced a 20% decline, which further extended to 50% by mid-2021. Prior to this downturn, there was a remarkable 250% surge in Bitcoin’s price over three months.
Market Valuations Crossing $100K Levels
It is also of significance to note that following the 250% drop in the first half of 2021, Bitcoin surged by 120%, reaching a cycle peak of $69,000 in the second half of the year.
Several market analysts anticipate a potential cooling-off period in early or late 2025. Alex Kruger, one of them, reiterated this sentiment, stating that “the top signals of 2021 began to surface in February.”
Will this pattern continue to influence Bitcoin’s performance between the current period and early or late 2025?
At present, predictive markets are valuing Bitcoin to surge above $100,000. According to Kalshi, there is an 81% chance of Bitcoin hitting $100,000 and a 10% chance of reaching $150,000 by the year-end.
Meanwhile, asset manager VanEck has projected that Bitcoin could achieve a cycle peak of $180,000. The firm attributes this prediction to a favorable regulatory environment for Bitcoin and funding rates exceeding 10% after the 2020 elections.
The firm’s recent BTC report in mid-November stated, “We anticipate another strong performance period, similar to the post-2020 election phase when consistent 10%+ funding rates led to a 260% gain over 186 days. Our target price of $180,000 remains feasible.”
On the other hand, Ki Young Ju, the founder of CryptoQuant, has put forth a more conservative forecast, suggesting a cycle peak of $141,000 and a target of $112,000 by the year 2024 based on realized capitalization valuations.
He pointed out that the market is yet to reach overheated levels. In previous years, Bitcoin peaked after touching the upper limit of the realized cap.
To summarize, the market anticipates Bitcoin to surpass $100,000, as indicated by the high levels of ‘extreme greed’. Nevertheless, any potential signals of a peak might come to light in early 2025.