View: Cryptocurrency market sentiment has diverged from price momentum, heightening correction risk.

CryptoQuant analyst Axel Adler Jr wrote that Bitcoin’s sentiment index has continued to cool since hitting a peak on August 24, yet remains in the "Extreme Greed" territory. Meanwhile, Bitcoin’s current price has declined rather than risen from its August 24 level of $78,700, meaning the uptick in market sentiment has not been matched by corresponding price momentum. In terms of sentiment composition, the current high level is driven primarily by the Fear & Greed Index, which has a Z-score of +2.19σ—more than two standard deviations above its 365-day average—while overall participant sentiment is only moderately optimistic. Data shows that the current "Extreme Greed" status does not stem from broad strength across all market sentiment indicators, but rather reflects a sharp rebound in the Fear & Greed Index from its depressed levels over the past year. The analysis notes that a high sentiment index alone does not signal an imminent market downturn, but the combination of extreme optimism and a lack of sustained price upside could make the market more sensitive to weakening demand. To confirm a more sustainable uptrend, Bitcoin’s price needs to validate the current high sentiment level via further momentum growth, with other sentiment indicators also improving in tandem. Conversely, if elevated sentiment persists while demand and prices fail to follow through, the market’s correction risk could rise.