Bizarre Bitcoin On-Chain Correlation With Fear And Greed Index Discovered

Tony "The Bull" Severino

Last Updated: June 11, 2024 2:13 pm

3 mins read

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Fear and greed are just two key emotions that drive the price action behind all markets, including Bitcoin and other cryptocurrencies.

A bizarre correlation has been discovered in on-chain Bitcoin network data that directly matches up with the cryptocurrency market “fear and greed” index. Here’s why this find is so striking and and what information investors, traders, and analysts can glean from the data.

Bitcoin Behaviors: Fear And Greed Appears In Unspent Transaction Outputs

There’s nothing else quite like Bitcoin and the way the network and user base behaves. As a result, certain tools have been developed to analyze the cryptocurrency network’s on-chain metrics, including the total number of transactions, how much money is being spent, and much more.

The data also includes very specific and specialized information such as unspent transaction output (UTXO).

Related Reading | Why March Is The Bloodiest Month In Bitcoin History

As a speculative asset, nothing else quite behaves like Bitcoin. Shifts in sentiment take price action to the extreme. As a result, tools have been developed to monitor the fear or greed in the market.

Interestingly, one crypto analyst has discovered that the percentage of UTXOs in profit matches the fear and greed index perfectly.

So we've all been wondering how the Fear & Greed index looks in bull markets since the data only goes back to 2018. I figured it out today. This is the F&G index compared with the data on % of BTC UTXOs in profit provided by @glassnode: pic.twitter.com/TF0ywd4Ble

— Stillman (@Stillm4n) February 22, 2021

Each peak and trough in the fear and greed index aligns eerily well with UTXO data layered over the Bitcoin price chart. And because the data matches so accurately, it can potentially be incredibly useful for timing tops during the current bull market.

UTXOs Provide Clues To Bull Profits Of Past Crypto Cycles

The fear and greed index was launched in 2018, right as the bear market began. The index was born in the bear market, and only a handful of times has reached the point of true greed.

When Bitcoin reached greed in 2019, a sharp reversal to retest the bottom took place. Since then, Bitcoin has creeped increasingly higher on the fear and greed index.

Using the UTXO data that matches the fear and greed index so well after the tool was launched, there’s an opportunity to potentially understand how fear and greed played out in the previous bull markets.

In 2013, there were two major greed-fueled impulses, followed by a bear market. In 2017, the bull market ran freely for nearly a full year – leaving bump after bump on the chart.

Here's what past bull market greed-driven "peaks" look like. | Source: Glassnode

A total of five large bumps appear in 2017 following two triangle peaks. During this cycle, there’s a third triangle-shaped peak, but only one bump so far. Does this mean that Bitcoin could have as many as four more bullish impulses left before the top is in?

Anything is possible, but if the fear and greed index begins to turn down in the days and weeks ahead, could be a sign that a new bear market has begun.

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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