January 13, 2022

Crypto Basics: What Is The ‘Fear And Greed Index’?

 There have also been several times crypto articles mention the Crypto Fear and Greed Index, especially when the market fell sharply, as happened when the price of Bitcoin (BTC) plunged to a low of $ 42,000 in early December.


Also known as the Greed and Fear Index this has actually long existed with the objective of wanting to follow stock market movements and monitor whether it is trading evenly or vice versa.


"Financial market movements are driven by two strongest emotions: greed and fear." - Wall Street.


Since investor emotions are like a roller-coaster, then this index is weighed daily, weekly, monthly, and annually.


#Bitcoin time $ 40k in 2021/2022 pic.twitter.com/3fw5EjCVbB


- Intraday (@IntradayDotMy) January 10, 2022



Here are the facts about the Fear and Greed Index:


Explanations for the three categories of emotions:

Fear, Extreme fear

Investors are too worried; opportunities to purchase or add assets.

Calculated from 0 to 49.

Neutral

No emotional disturbances. Investors are happy and calm. As usual, there is no market storm.

Calculated at 50.

Greed (Greed), Extreme greed (extreme greed)

Investors are too greedy; opportunity to sell, but beware! Because this index also signals that there will be a price correction.

Calculated from numbers 51 to 100.

Some factors that affect this index:

Market volatility - 25%

Market volume or momentum - 25%

Social media - 15%

Reviews - 15%

Dominance - 10%

Trend - 10%

Advantages of using this index:

Reliable indicators.

Can be used as a tool for investment decision making.

Disadvantages of using this index:

Reliance on this index encourages investors to buy and sell assets, causing more market uncertainty.

But, there are also a handful of investors who are more comfortable making investments without evaluating FGIs.


Follow each other's comfort. Importantly, make sure you make a safe investment and not blindly, just follow greed simply out of fear of FOMO.