What is Crypto Fear and Greed Index?

by | Aug 19, 2021

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When it comes to trading cryptocurrencies, traders often rely on various indicators to keep track on market. In our earlier blogs, we covered these indicators explaining their working and helping you recognize the market conditions. These blogs can be accessed under the blog category TA-101

Today, we’ll be talking not about yet another indicator, but an index – Crypto Fear and Greed Index. Based on CNNMoney Fear and Greed Index for analyzing the stock market, the Crypto Fear and Greed Index is for sentimental analysis and an overall feeling of the crypto market. However, it’s advisable to not rely on a single index when it comes to crypto trading and not to make buy or sell decisions by simply looking at the crypto fear and greed index.

Now. let’s have a look at the crypto fear and greed index and how to read it.

How to Read Crypto Fear and Greed Index?

Well, it’s fairly simple to read the crypto fear and greed index. When looking at the index, a score between 0 to 49 indicates undervaluation of the crypto market and suggests a fear sentiment across the ecosystem. Similarly, a score between 50 and 100 indicates an overvaluation of the market and suggests a greed sentiment. Thus a score of 0 means extreme fear whereas a score of 100 means extreme greed sentiment across the market. 

Reading the crypto fear and greed index can help you make decisions regarding entering or exiting the market. One can also have a look at the crypto fear and greed index over time and see the past data to analyze the market sentiment of the past 7 days, 30 days, 3 months, 6 months, or 1 year.

Why Read Crypto Fear and Greed Index?

The website Alternative.me that plots the crypto fear and greed index answers the question saying the crypto market is very emotional that is often driven by irrational reactions of people either falling for the greed or fear. Using this fear and greed index, crypto traders can avoid emotional overreaction to market conditions and take better decisions.

Although, not everyone agrees with this. To quote Warren Buffet, “Be fearful when others are greedy and greedy when others are fearful.”  Additionally, it’s an established fact that buying and holding is one of the strategies that has worked pretty well for cryptocurrencies.

So, whether you agree or disagree with this index, it’s always good to learn about such indices and factor them into your trading strategies. Furthermore, if you’re looking to supercharge your crypto trading, download and become a HyperTrader today.

Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"

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