Crypto Data
Crypto Fear & Greed Index
Real-time market sentiment indicator for cryptocurrency markets
What is the Fear and Greed Index?
The Crypto Fear and Greed Index is a metric that measures the prevailing sentiment in the cryptocurrency market on a scale from 0 to 100. A score of 0 represents "Extreme Fear," indicating that investors are very worried, which could signal a buying opportunity. A score of 100 represents "Extreme Greed," suggesting that the market may be due for a correction.
Originally inspired by the CNN Money Fear and Greed Index for traditional stock markets, this crypto-specific version was created to help investors understand the emotional state of the market and make more rational decisions.
Why Does It Matter?
Cryptocurrency markets are highly emotional. People tend to get greedy when the market is rising, which results in FOMO (Fear Of Missing Out). Conversely, people often sell their coins in an irrational reaction when they see red numbers.
The Fear and Greed Index attempts to save you from your own emotional overreactions. There are two simple assumptions:
- Extreme fear can be a sign that investors are too worried. This could be a buying opportunity.
- Extreme greed means investors are getting too bullish. This could signal that the market is due for a correction.
Warren Buffett famously said: "Be fearful when others are greedy, and greedy when others are fearful." This index helps quantify exactly that sentiment.
How Is It Calculated?
The index aggregates data from multiple sources, each contributing a weighted portion to the final score:
Volatility (25%)
Measures current volatility and max drawdowns compared to average values. Unusual increases in volatility indicate a fearful market.
Market Momentum/Volume (25%)
Compares current volume and momentum to 30/90 day averages. High buying volumes in a positive market signal greed.
Social Media (15%)
Analyzes sentiment from Twitter and Reddit posts, tracking hashtag engagement rates and interaction speeds.
Surveys (15%)
Weekly crypto polls gather sentiment from thousands of participants to gauge market mood.
Bitcoin Dominance (10%)
Rising BTC dominance signals fear (flight to safety), while falling dominance suggests greed (risk-on altcoin speculation).
Google Trends (10%)
Analyzes search queries for Bitcoin and crypto-related terms. Spikes in searches like "Bitcoin crash" indicate fear.
How to Use the Index
The Fear and Greed Index should be used as one tool among many in your investment decision-making process. Here are some practical applications:
- Contrarian indicator: Consider buying when the index shows extreme fear and being cautious when it shows extreme greed.
- Timing tool: Use it to time your dollar-cost averaging. Increase purchases during fear periods and reduce during greed.
- Risk management: When greed is high, consider taking profits or reducing exposure. When fear is high, it might be time to accumulate.
- Market context: Combine with technical analysis and on-chain metrics for a more complete picture.
Disclaimer: The Fear and Greed Index is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.