On one hand, you have Bitcoin now flirting with its $112,000 all-time high, driven by increasing positive sentiment among retail investors. This new tsunami of positive sentiment could actually be the canary in the coal mine. A few signs point to the market being overheated and due for a major correction.

Retail Investors Show Increased Optimism

Excess liquidity and hope Retail investors are becoming more bullish on Bitcoin. Positive sentiment among treasures has exploded to levels not seen since the US presidential election, November 2024. The ratio of positive to negative comments on social media regarding Bitcoin is currently 2:1, indicating strong optimism among retail investors. This degree of excitement is unusual. Donald Trump’s election to the Oval Office in November 2024 sent a wave of euphoria through the crypto sphere.

According to popular blockchain analytics platform Santiment, the conversation around Bitcoin is on fire with mentions of “all-time high”. This increase in frequency is the most robust it’s been all month. Santiment’s data really shows the developing enthusiasm and full attention on Bitcoin as it moves toward new all-time-high prices. Investor sentiment has turned from negative to bullish. This shift is against a backdrop of reduced US–China tariff tensions and lessening relationship between Trump and Musk.

Fear and Greed Index Enters "Greed" Zone

The Index of Fear and Greed has officially crossed into the “greed” territory, reading above 60 in June of 2025. During the past year, extremely high readings on this index have acted as very effective canaries in the coal mine for Bitcoin. This is a signal the market is getting too cocky.

Longtime Bitcoin trader and analyst Peter Brandt recently sounded the alarm on the possibility of a repeat of Bitcoin’s 2022 bear market. A bearish “double-top” formation in Bitcoin could send the cryptocurrency crashing 75%. Indeed, Brandt’s broader analysis does indicate that the current market climate is similar to past quarters of turmoil, and that investors should be cautious.

Potential Market Correction

Positive sentiment can create upward price movement faster than you can say DeFi. Excessive enthusiasm can lead to irrational exuberance and blow up market bubbles. Bitcoin is over 2x positively commented on social media than negatively. This 2:1 ratio is the highest since the US presidential election in November 2024.

If the market gets too overbought, the market risks a larger correction. Surprise bad news on the macroeconomic front can spook investors and cause this type of correction. Extreme values of the Fear and Greed Index regularly trigger alarm bells for Bitcoin. Looking back over the past year, these alerts have been critically important. Investors should stay on their toes and assume a recession is coming, even with all the good news we’ve seen lately.