Bitcoin’s six-figure valuation and millions of retail investors with wealth to gain from fluctuations in its price. Currently, the overall market sentiment regarding Bitcoin is neutral. This past Tuesday, June 27, crypto analyst Maartunn made a huge splash across the industry when he revealed that… The market sentiment metric 90-day Futures Taker Cumulative Volume Delta (CVD) metric turned cloudy and reached a neutral point. Alphractal, another analyst, made these on-chain observations, further supporting this bullish sentiment.
Understanding the 90-Day CVD Metric
The 90-day Futures Taker Cumulative Volume Delta (CVD) is a foundational tool in helping to gauge market sentiment. In particular, it takes a deep dive into the Bitcoin futures market. It measures the net accumulation or distribution pressure over a 90-day period. What this index analysis does show is the overall sentiment of traders in this market. The metric goes from 0 to 100, where 0 means extreme fear, 50 is neutral, and 100 extreme greed.
A 90-day CVD value between 0 and 24 indicates very fearful conditions in the market. A score between 25 and 49 indicates overarching apprehension. A number of 51-74 indicates greed and 75-100 means extreme greed. A reading of 50 would indicate a balance of forces, with bullish and bearish pressure perfectly offsetting one another.
Current Market Sentiment
On the surface, the current 90-day CVD is flat – a sign of equal push and pull by bullish and bearish forces worldwide in the Bitcoin market. This positive but non-hyperbolic interpretation implies that investors are not displaying extreme bullishness or bearishness about Bitcoin short-term future. Crypto analyst Maartunn provided great detail on X around this change. He said the value of the new metric is key to understanding what’s happening in the market.
Traders and analysts alike can use the 90-day CVD metric to better understand investor sentiment. This hugely effective smart tech enables them to identify the markets with the greatest potential for buying or selling them. Keeping an eye on changes in this metric can be a good gauge of how optimistic or pessimistic investors feel about the bitcoin market today. This knowledge allows them to trade better and smarter.
Implications of Extreme Greed
In the past, times of extreme greed, as measured by a 90-day CVD value of 75-100, have usually come right before market tops. This is largely due to the fact that when too much optimism gets priced in, valuations become overextended and eventually get corrected.
Further, the neutral sentiment reflects a generally positive market climate. Nevertheless, investors need to be on their toes and keep watching the 90-day CVD and other important indicators for any indications that sentiment is turning. Prudent risk management and a disciplined approach to investing will be key in successfully steering through the boom-and-bust world of cryptocurrencies.
