Opinion: Cryptocurrency Market Sentiment Diverges from Price Momentum, Increasing Pullback Risk

BlockBeats News, September 2nd, CryptoQuant analyst Axel Adler Jr posted that the Bitcoin Fear and Greed Index peaked on August 24th and has since cooled down but remains in the "extreme greed" range. Meanwhile, Bitcoin's current price has not risen but fallen from $78,700 on August 24th, indicating that the market sentiment warming up has not received corresponding price support.

From a sentiment composition perspective, the current high is mainly driven by the Fear and Greed Index. The Z-score of this index has reached +2.19σ, which is more than two standard deviations above the 365-day average. Participant sentiment is only mildly optimistic. Data shows that the current "extreme greed" does not indicate a general strengthening of various market sentiment indicators but rather reflects a significant rebound of the Fear and Greed Index from the low benchmark of the past year.

The analysis points out that a high sentiment index itself does not mean that the market is about to reverse, but a combination of extreme optimism and a lack of price follow-through may make the market more sensitive to weakening demand. To confirm a more sustainable uptrend environment, Bitcoin's price needs to validate the current high sentiment level through further momentum growth, with other sentiment indicators also needing to improve simultaneously. On the contrary, if high sentiment persists without demand and price following through, the market faces an increased risk of a pullback.