— Warren Buffett
Economists use the term ‘animal spirits’ to describe how human emotions can impact financial markets. Often, traders unknowingly act based on herd behavior — causing the price of Bitcoin and other assets to go up or down.
Some traders use the Fear and Greed Index to determine when cryptocurrencies are undervalued. If there is an excessive amount of fear, it may be a sign that BTC and other crypto-assets can be bought at a discount. An excessive amount of greed may be a sign that a market correction is on the horizon.
The Crypto Fear and Greed Index is updated every 12 hours.
Volatility - An increase in volatility is a sign of a fearful market.
Market Momentum - The index compares current volume to 30 and 90 day averages. Increased volume shows an increased amount of greed in the market.
Social Media Sentiment - The Crypto Fear and Greed Index uses Twitter sentiment analysis to calculate greed. Unusually high interaction rates is a sign of increased greed.
BTC Dominance - An uptick in Bitcoin dominance is viewed as a sign of a fearful market — since Bitcoin is considered the ‘safest’ cryptocurrency asset. On the other hand a decrease in Bitcoin dominance suggests a shift towards more speculative altcoins, reflecting a greedier market.
Search Trends - Google Trends data is analyzed to gauge public interest in Bitcoin. An uptick in search terms like ‘bitcoin price manipulation’ signals fear, while terms like ‘bitcoin price prediction’ signal greed.
The Fear and Greed Index is a measure of the overall sentiment of the cryptocurrency market.
If you want to check the Fear and Greed Index regularly to make better trading decisions trading decisions, bookmark this page! Data is updated every 12 hours.
Remember, the Fear and Greed Index is just one tool in a trader’s toolbox. You should take a look at other indicators like the Bitcoin Rainbow Chart and Bitcoin Dominance chart before making trading decisions.
Tools like the Fear and Greed Index can help you better understand the overall sentiment of the market and help you better understand your own emotions when trading crypto.
