In a remarkable turn of events, Bitcoin’s (BTC) price has surged more than 20% since last Thursday. But, before enthusiasts start celebrating, it might be wise to anticipate a potential break in this spirited rally. Matrixport’s Bitcoin Greed & Fear Index (GFI) reveals a rapid leap from under 10% to 93% in just about a week. This indicator is designed to gauge dominant market emotions, with readings above 90% signaling excessive optimism or greed, while figures below 10% represent extreme pessimism or fear.
Markus Thielen, head of research and strategy at Matrixport, advises caution: “Our Bitcoin Greed & Fear Index has reached exuberant levels in record time. It could be well advised to lock in some gains for short-term traders.” Interestingly, the 21-day simple moving average (SMA) of the GFI is far from the 90% level, implying that Bitcoin’s overall path of least resistance remains on the higher side.
Thielen further explains, “The fact that the 21-day moving average (black line) is still rising could signal that Bitcoin prices have more upside after the current phase of exuberant momentum is worked off with some consolidation.” Chart analysts suggest that a rally towards the mid-$30k range is plausible, but heavy resistance and reconsolidation may be required before moving higher.
Josh Olszewicz, a market analyst, shares his insights: “Price successfully bounced on that throwback area and completed the falling wedge setup. We have both the prior inverted head and shoulders target zone as well as the new falling wedge target zone. Additionally, we’ve got overhead pivot resistance around $38,000.”
In the past few days, Bitcoin has bounced back from a mid-April high of $31,000 to the previous resistance-turned-support of $25,200 earlier this month, a pattern known as a “throwback.” As of now, Bitcoin is being traded at $30,065 according to CoinDesk data.
On the other hand, Ether (ETH), the second-largest cryptocurrency by market value, has seen a 15.9% gain since last Thursday, underperforming Bitcoin by a significant margin. Interestingly, Ether’s GFI index has not yet reached 90%, suggesting that it may continue to rise while Bitcoin experiences a much-needed breather.
Source: Coindesk
