Fear & Greed Index

Overview

The Fear and Greed Index is a sentiment tool often used in cryptocurrency markets, particularly Bitcoin, to measure the market's general state of emotional drive. The index ranges from 0 to 100, with 0 representing "Extreme Fear" and 100 representing "Extreme Greed".

Calculation

The Fear and Greed Index is calculated based on the following factors:

• Volatility (25%): Measures the current volatility and maximum drawdowns of Bitcoin and compares it with the corresponding average values of the last 30 and 90 days.

• Market Momentum/Volume (25%): Measures the current volume and market momentum in comparison with the last 30/90 day average values.

• Social Media (15%): Gathers and counts posts on various hashtags for each coin and checks how fast and how many interactions they receive in certain time frames.

• Surveys (15%): Conducts weekly crypto polls and asks people how they see the market.

• Dominance (10%): The dominance of a coin resembles the market cap share of the whole crypto market.

• Trends (10%): Pulls Google Trends data for various Bitcoin-related search queries and crunches those numbers.

Interpretation

The Fear and Greed Index is interpreted as follows:

• Values near 0 indicate "Extreme Fear", suggesting that the market may be oversold and that a buying opportunity may be present.

• Values near 100 indicate "Extreme Greed", suggesting that the market may be overbought and due for a correction or pullback.

Indicator Triggers:

The Fear & Greed indicator uses only basic general triggers: Cross level and In zone.

Fear & Greed index triggers

Notes

• Use the Fear & Greed Index as an additional tool, not as a standalone indicator. It can provide valuable insights into market sentiment, but should be used in conjunction with other technical and fundamental analyses.

• Understand the extremes of the Fear & Greed Index. When the index approaches extreme fear or extreme greed, it may indicate potential market reversals or opportunities. However, it is important to consider other factors and indicators before making trading decisions.

• Use the Fear & Greed Index to assess market sentiment, but rely on your own analysis and judgment. It is essential to develop your own trading strategy and not solely depend on the index for decision-making.