Crypto Assets Fear and Greed Index Interpretation: The greed zone is lingering, with Bitcoin dominance supporting the bull run, but the RSI pullback suggests short-term pullback risks?

Recently, the sentiment in the Crypto Assets market has turned bullish, with the Fear and Greed Index (CFGI) briefly reaching 70 before retreating to 62, still within the greed zone, indicating strong market confidence. The global market capitalization has surpassed $4 trillion, with both Bitcoin and Ethereum prices rising. However, historical experience shows that extreme greed often accompanies pullbacks, and the relative strength index (RSI) for BTC and ETH has retreated from the Overbought zone. Combined with the current greed index, this may signal short-term market fluctuation risks. Bitcoin's high dominance (60.80%) provides support, sustaining bullish momentum. The community's views on the future market are divided, with some expecting alt season and others worrying about its absence. Analysis suggests that high greed does not necessarily lead to an immediate reversal, and the bull run may still have room for upward movement.

[Market sentiment warms up, greed continues] Crypto Assets investor sentiment has recently shifted to positive. This change comes as the Crypto Fear and Greed Index (CFGI) once climbed to a peak of 70 — clearly signaling a surge in market optimism. As of the time of writing, the index has retreated to 62, but remains firmly in the "greed" zone. This indicates that current market confidence remains strong, with investors generally holding a bullish attitude towards Crypto Assets.

[Market capitalization rises broadly, BTC and ETH lead the way] The improvement in market sentiment coincides with a 2.38% increase in the total market capitalization of global Crypto Assets, reaching $4.05 trillion. In the past 24 hours, the price of Bitcoin (BTC) surged by 3.33% to $121,706, while the price of Ethereum (ETH) rose by 2.02% to $4,271, jointly supporting the rise in overall market capitalization. The rebound in prices of mainstream Crypto Assets has attracted more funds to enter the market.

[Historical Lesson: Pullback Risks After Greed] What insights can historical trends provide us? Looking back, after experiencing periods of extreme greed, the cryptocurrency market often sees prices followed by pullbacks or entering consolidation. This is because investors tend to lock in profits or adjust their positions to avoid potential risks caused by overvaluation. Although the current greed index is not extreme, it is already worth being cautious of increased market Fluctuation.

[Indicator Warning: RSI Pullback Adds Variables] Santiment's latest on-chain data adds another layer of perspective to this analysis. For example, the Relative Strength Index (RSI) of Bitcoin and Ethereum shows signs of decline after reaching the peak of the overbought zone. A pullback in the RSI indicator usually indicates a weakening of upward momentum. The high Fear and Greed Index combined with the declining RSI suggests that there may be a possibility of a pullback in the market in the short term. However, in such a dynamically changing market environment, certainty remains elusive.

(Source: Santiment)

[Bitcoin dominance supports the overall situation] Nonetheless, Bitcoin's market dominance plays a crucial role in maintaining the overall bullish sentiment in the entire crypto space. At the time of writing, it accounted for as much as 60.80%, indicating a clear "risk-off" tendency in the market, where investors are flocking to the most mature and liquid crypto assets for safety. Bitcoin's dominance often sets the tone for the entire market, especially during periods of significant price fluctuations or increased uncertainty. If Bitcoin's high dominance can be maintained, it may help prolong the current wave of greed sentiment, allowing bullish momentum to continue in the short term and exerting some pressure on altcoin markets.

[Community Discussion: Optimism and Doubts Coexist] In response to the current market situation, community users have varied opinions. A user from platform X commented: "Who said crypto assets were dead? This is just the beginning, my friend—if we compare the growth trajectory to traditional financial markets, the potential for rise is enormous. Remember when a market capitalization of 1 trillion USD seemed unreachable? Now we stand at 4 trillion USD, and the fear and greed index is only at 62." This reflects the extreme optimism of some investors regarding the future potential of the crypto market.

Another user, Sebastian Diaconu, provided a more comprehensive analysis of the market's pros and cons. Regarding the positives, he pointed out: "The Fear and Greed Index is still at a reasonable level, which means there is still significant room for a rise in the future." However, concerning the worries, he added: "The alt season that everyone is expecting has not occurred, at least not now. Yes, we have Ethereum, XRP... and then it's over. So the core question is: will the alt season actually come?" This directly highlights the current investors' general anxiety about when the altcoin market will explode.

[High Greed ≠ Immediate Decline? History May Have Different Interpretations] But is this the whole story? According to analysis by AMBCrypto, high greed signals do not always mean that the market will immediately turn downward. Market sentiment can sometimes remain elevated for quite a long time before a significant pullback occurs. For example, looking back to May 23, the Crypto Fear and Greed Index reached 78, deeply entrenched in the "Extreme Greed" zone. At that time, the price of Bitcoin was climbing to a high of $111,800. This synchronous phenomenon also proves that even in cases of overheated market sentiment, the momentum of the bull run can still continue, leaving room for further price increases, after which market forces might correct.

Conclusion: The current cryptocurrency market is shrouded in greed, with Bitcoin's strong price and high dominance providing stable support for the market, maintaining a bullish momentum. However, the historical pattern of the fear and greed index being high, along with the pullback of Bitcoin and Ethereum's RSI from the overbought zone, indicates that investors should be wary of potential short-term pullback risks. Whether the market can continue to rise or enter a consolidation phase requires close attention to changes in Bitcoin's dominant position, the influx of incremental funds, and the overall macroeconomic environment. Investors should currently focus on assessing their own risk tolerance and avoid making irrational decisions driven by FOMO (fear of missing out), while flexibly responding to potential market fluctuations.