Bitcoin has reclaimed the $100,000 mark, surging 12.5% from its recent bounce at $90,000 earlier this week. This rally has propelled optimism across the crypto market, with major altcoins echoing Bitcoin’s momentum. The total cryptocurrency market capitalization has climbed from $3.14 trillion to $3.57 trillion, reflecting a $430 billion inflow in just five days.

Fear and Greed Index Signals Overbought Territory

The Crypto Fear and Greed Index, a widely-followed measure of market sentiment, has quickly shifted from neutrality to greed, nearing the “Extreme Greed” zone. This level often indicates overbought conditions and warns of a potential market correction if optimism escalates too rapidly.

Historically, periods of extreme greed have been followed by significant pullbacks. However, sustained bullish sentiment, anchored by Bitcoin holding strong above $100,000, could stabilize the index and temper the risk of a dramatic downturn.

Can Bitcoin Maintain Its Momentum?

Bitcoin’s ability to establish $100,000 as a solid support level will be crucial in sustaining this rally. A successful defense of this level could reset market sentiment, easing concerns of overbought conditions and encouraging further inflows into the market.

Conversely, a dip below $100,000 could reinforce historical trends where extreme greed triggers corrections. The market now watches closely as Bitcoin trades at $101,420, up 1.6% in the last 24 hours.

Key Takeaway for Traders

The current sentiment highlights the need for caution. While the rally reflects optimism, traders should consider the potential for a correction if extreme greed dominates. Watching Bitcoin’s ability to maintain key support levels will be critical in assessing the next market move.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always do your own research before making investment decisions.