A Bitcoin sentiment index tracked by CryptoQuant analyst Darkfost has hit its highest level in six months. The indicator briefly crossed 89 on a 100-point scale, marking the highest level since March 2024 and officially entering extreme greed territory.
By comparison, other market gauges show positive sentiment without reaching extreme levels. The Fear and Greed Index from Alternative.me stood at 63, within the greed zone, when the initial report was published. This represents a slight cooling from 73 a week earlier, though still up sharply compared to last month’s level of 29.
Why 89 Is a Warning Signal
A sentiment reading as high as 89 does not always align with price direction. Darkfost warned that extreme readings like this have a strong tendency to appear right around market turning points. Rather than confirming a continuation of the upward price trend, this elevated sentiment acts as a risk signal.
Institutional Capital Flows Out Instead
The risk warning from the sentiment indicator coincides with actual capital flow data in the stock market. While retail sentiment overheats, US spot Bitcoin ETFs recorded $462.7 million in net outflows. This multi-hundred-million-dollar withdrawal took place across four trading sessions between September 8 and 11, during the trading week following the September 7 Labor Day holiday.
Four consecutive days of outflows snapped the inflow momentum built over previous weeks. In the three preceding weeks, including the week ending September 7, Bitcoin ETF products consistently posted inflows of around $3.8 billion. Given this stark contrast, market analyst Ko stated that further proof of sustained inflows is needed before concluding that institutional accumulation is taking place.
Inflation Stays Sticky Ahead of Fed Meeting
Crypto market movements this week face headwinds from US economic data releases. The inflation report for August showed the Consumer Price Index (CPI) rose 3.4% year-on-year (yoy), unchanged from July. Meanwhile, core CPI posted a 0.3% month-on-month (mom) increase and grew 2.4% yoy.
These stubborn economic details add pressure on the Federal Reserve, which is scheduled to hold its policy meeting on September 15-16. The US central bank’s interest rate decision remains an open question. The combination of extreme retail sentiment, ETF capital outflows, and inflation holding above target creates a series of mixed signals. Both on-chain and macroeconomic data point to the need for increased caution among market participants.
Reported by crypto.news.
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Also read: US Bitcoin ETFs Lose $462.7 Million in Four Days - But Institutions Pivot to Buying Ethereum
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
