Bitcoin Market Sentiment Index Falls from Extreme Greed to Neutral, Signaling Cautious Trading and Potential Price Volatility

Bitcoin’s market sentiment has shifted notably, with the widely tracked Sentiment Index plunging from ’Extreme Greed’ to ’Neutral’. This change follows an earlier period of cautious optimism identified by on-chain metrics such as the Combined Market Index (BCMI) SMA rebound and improved valuation ratios, which suggested early stages of accumulation and network health. However, following a strong price surge, investor enthusiasm has cooled due to concerns of market overextension and uncertain macroeconomic signals. Profit-taking has increased and market participants are reassessing positions, as shown by declining sentiment and heightened short activity. Historically, sharp drops like these in the sentiment index often precede increased price volatility and can signal corrections or trend reversals. Analysts recommend traders exercise caution, as the neutral reading implies possible pauses in upward momentum and a higher risk of short-term corrections. Overall, while fundamentals are improving, market optimism remains cautious and traders should prepare for potential volatility.