Crypto Market Experiences Extreme Greed: Deleveraging Needed Before Bitcoin Hits $100K
The cryptocurrency market is currently experiencing a phase of extreme greed, as indicated by a surge in investor sentiment. On November 12, the Crypto Fear & Greed Index recorded a score of 80, signaling 'extreme greed' just a day after Bitcoin (BTC) broke its previous record high of $85,000 on November 11.
Historically, such high levels of sentiment can precede significant corrections. The last instance of the index reaching 80 was on April 9, 2024, which was followed by an 18% drop in Bitcoin's price over the next three weeks, declining from over $69,135 to a low of approximately $56,500 by May 1, according to data from Bitstamp.
Despite these warning signs, many analysts maintain a bullish outlook for Bitcoin as it approaches the end of 2025. On November 12, Bitcoin neared the $90,000 mark, showcasing its strongest weekly performance since the banking crisis in the United States earlier this year. Over the past week, Bitcoin has added more than $413 billion to its market capitalization, reflecting robust market activity.
However, concerns about the sustainability of current leveraged trading ratios have been raised. Kris Marszalek, co-founder and CEO of Crypto.com, highlighted that the leverage ratio—representing the amount of borrowed funds utilized for trading—has reached alarming levels. Currently, Bitcoin's estimated leverage ratio across all cryptocurrency exchanges stands at 0.217, a peak not seen since October 2023, according to CryptoQuant.
Investors are advised to proceed with caution. Nevertheless, Shunyet Jan, head of derivatives at Bybit, believes that the anticipated victory of Donald Trump in the upcoming presidential election could further bolster Bitcoin's price. Some analysts predict that Bitcoin could surpass the $100,000 threshold by the end of the year, driven by favorable macroeconomic conditions stemming from Trump's potential presidency.
In summary, while the crypto market is witnessing extreme investor enthusiasm, a correction may be on the horizon unless deleveraging occurs. The interplay of political events and market sentiment will be crucial in determining Bitcoin's trajectory in the coming months.