Fear and Greed Index: Market Sentiment Tool for Crypto Traders

The "Fear and Greed Index" for the crypto market is a tool that measures investor sentiment on a scale from 0 to 100. Low values indicate "extreme fear," while high values reflect "extreme greed."

The index is calculated using data such as volatility, trading volume, social media activity, Google search trends, and Bitcoin’s dominance over other cryptocurrencies. A rise in Bitcoin dominance usually signals fear, while high buying volumes suggest a market driven by greed.

In January 2024, the index reached 76, marking "extreme greed," fueled by expectations of Bitcoin ETF approval. In July 2024, it dropped to "extreme fear," after Mt. Gox began repaying creditors, potentially releasing large amounts of Bitcoin into the market. Sales of BTC by the German government also contributed to the decline.

The index is influenced by factors such as regulatory news, price fluctuations, global economic conditions, technological innovations, and actions of major investors. Analysts see it as a useful benchmark for assessing overall market sentiment.