Extreme Greed

Definition ∞ Extreme greed, in financial markets including cryptocurrency, refers to a period characterized by excessive investor optimism and a strong desire for quick, substantial profits. This sentiment often drives speculative buying, inflated asset valuations, and a disregard for fundamental risks. Such market conditions frequently precede significant price corrections or crashes. Recognizing extreme greed helps investors make more informed decisions.
Context ∞ Extreme greed is often discussed in crypto news in relation to market cycles and the “Fear & Greed Index,” a common sentiment indicator. The current situation often sees market participants chasing parabolic gains, sometimes leading to unsustainable rallies. Observing this sentiment is critical for understanding potential market tops and impending volatility, allowing for prudent risk management.