The Fear & Greed Index is a popular sentiment indicator used in the cryptocurrency market to gauge investors' confidence.
Fear & Greed Index
Fear & Greed Index (Crypto Definition)
The Fear & Greed Index is a popular sentiment indicator used in the cryptocurrency market to gauge investors' confidence. Developed by Alternative.me, the crypto version of the index adapts a concept originally applied to traditional stock markets and provides a score from 0 (Extreme Fear) to 100 (Extreme Greed), updated daily.
How It’s Calculated
The index combines multiple factors to produce a single score:
- Volatility (25%) – Measures market instability compared to recent averages
- Market Momentum/Volume (25%) – Analyzes trading volume and price momentum
- Social Media Sentiment (15%) – Tracks mentions, hashtags, and engagement across platforms
- Surveys (15%) – User sentiment polls (currently paused)
- Bitcoin Dominance (10%) – Measures BTC’s share of the total crypto market cap
- Google Trends (10%) – Monitors search interest in Bitcoin-related terms
Each factor is normalized and weighted to reflect current investor behavior and emotional trends.
How Investors Use the Fear & Greed Index
- Extreme Fear (0–25): Signals potential buying opportunities; market may be undervalued due to panic.
- Neutral (46–54): Indicates balanced sentiment; market is stabilizing.
- Extreme Greed (75+): Suggests overheating; may be time to take profits or de-risk positions.
Traders and long-term investors use the Fear & Greed Index to time entries and exits, confirm market cycles, or manage risk during volatile periods.
Summary
The Crypto Fear & Greed Index is a daily emotional snapshot of the market, blending technical and behavioral signals to help investors make more informed decisions. By tracking crowd psychology, it offers a simple but powerful tool for identifying shifts in market sentiment.