The Alternative.me website analyzes emotions and sentiments from different sources and crunches them into one simple number called The Fear & Greed Index for Bitcoin and other large cryptocurrencies. The crypto market behavior is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. The idea of the Fear and Greed Index is simple – to save you from your own emotional overreactions. Extreme fear can be a sign that investors are too worried and that could be a buying opportunity, while when Investors are getting too greedy, that means the market is due for a correction.
The different factors that create the value of the Crypto Fear and Greed Index are: Volatility (25%), Market Momentum/Volume (25%), Social Media (15%), Surveys (15%), Dominance (10%) and Trends (10%). The current value of the index is 14 which is considered Extreme Fear and you can see the results in the price drop of Bitcoin and other major crypto currencies in the last few hours. It is interesting to note that yesterdays index was at 17, so Extreme Fear as well (though slightly less than today). Do note that the lower the number, the higher the Fear is, the higher the number, the higher the Greed is. And in situations of Extreme Fear come the good opportunities, though do not forget that risk is also high!
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