Bitcoin Fear and Greed Index

What Is The Fear And Greed Index?

The Fear and Greed Index is a tool that helps investors and traders analyze the Bitcoin and Crypto market from a sentiment perspective. It identifies the extent to which the market is becoming overly fearful or overly greedy. Hence why it is called the Fear and Greed Index.

The idea is that when the market is generally overly fearful, it may indicate that Bitcoin is cheap/undervalued at that time and could present a good buying opportunity.

The reverse also applies, so when the Fear and Greed Index is signalling market participants are extremely greedy, it may indicate the price of Bitcoin is too high above its intrinsic value and it could be a good time to sell.

Why Is The Fear And Greed Index Useful For Investors And Traders?

Understanding the scores from the Index could present an opportunity to the astute investor to buy when the market is overly fearful and sell when the market is extremely greedy.

The Fear and Greed Index can therefore act as a useful emotional management tool, allowing the investor to separate their own emotions from the rest of the market. This is especially the case when it is used alongside other tools that use different data inputs from the market, many of which can be found here.

How To Use Fear And Greed Index

The Fear and Greed Index is on a simple 0 to 100 scale and color-coded accordingly where 0 is red and 100 is green.

When the score is red and close to zero this signals extreme fear and could indicate that many Bitcoin ($BTC) investors are too concerned about the price dropping further.

When the score is green and close to 100 this signals extreme greed and could indicate that many investors of Bitcoin ($BTC) are too excited about the price of Bitcoin rising a lot further in the future.

How To Interpret The Fear And Greed Chart

Above, we not only show the Bitcoin index score but also overlay it on top of the price of Bitcoin on the chart. The benefit of this is that it allows you to see not only the current score but also to see how the score has changed with price over time.

This adds a new, unique dimension to the Bitcoin Crypto Fear and Greed Index that allows investors to understand how the Index interacts with price historically.

This can only be found on this page and is not on any other website we know of that has information about the Fear and Greed Index.

We will continually update this live chart every day so you can come back to see how the Bitcoin Fear and Greed Index is changing alongside the price of Bitcoin over time.

We hope you enjoy using this unique and free feature.

Data Source Inputs For Generating The Chart

The inputs for the Fear and Greed Index are generated every day from several different sources. Each one is relevant in its own unique way.

They include:

  • Current volatility of $BTC price action, relative to the last 30 days and 90 days. Exceptional increases in volatility can sometimes be a sign of an overly fearful market.
  • Momentum and Volume, relative to the last 30 days and 90 days. Exceptionally high buying volume on a relative basis can indicate that the market is becoming overly greedy.
  • Social media sentiment analysis looking at sentiment type and volume at a given time relative to historical norms.
  • Dominance of Bitcoin relative to other cryptocurrencies.
  • Google Trends across a range of relevant Bitcoin search terms to identify strong periods of growth or decline in Google Search.
Fall Further Down The Rabbit Hole

If you would like to learn more about the Fear & Greed Index head over to Alternative.me where they also have general pricing information about Bitcoin and a range of other cryptocurrencies.

In addition to the Fear and Greed Index, other market sentiment charts that use alternative data sources can be found here. In particular, Relative Unrealized Profit / Loss specifically looks at sentiment and complements the above approach as it uses on-chain data, which the above approach does not.

H/t to @cryptopou for the chart view.