What is the Digital Currency Market's Greed - Fear Index?

Every day, we analyze emotions and sentiments from different sources and aggregate them into one simple number: the Fear & Greed Index for Bitcoin and other major cryptocurrencies. Source AlternativeMe



Latest Crypto Fear & Greed Index

Why measure fear and greed?

The behavior of cryptocurrency market participants is very emotional. People tend to be greedy when the market is rising due to the FOMO (Fear of Missing Out) effect, which roughly means the fear of losing the opportunity to follow the trend.

Also, people often sell their coins with an irrational reaction to seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional outbursts. There are two simple assumptions:

  • Extreme fear can be a sign that investors are getting too nervous. That could be a buying opportunity.
  • When investors get too greedy, it means the market is about to correct.

Therefore, we analyze the current sentiment of the Bitcoin market and gather the numbers into a simple unit of measure from 0 to 100. Zero means "Extreme Fear", while 100 means "Extreme greed". See below for more information about our data sources.

Where does the greed-fear index come from?

We are collecting data from the following five sources. Each data point is priced the same as the previous day to visualize a meaningful progression in the changing sentiment of the crypto market.

First of all, the current index is only for bitcoin (we will soon provide separate indices for major alt coins), because a big part of it is the volatility of the coin's price.

But let's list all the different elements we're including in the current index:

Volatility (25%)

We are measuring current volatility and bitcoin withdrawal CPC bid and comparing it to the last 30 and 90 day averages respectively. We consider an unusual increase in volatility a sign of a scary market.

Inertia / trading volume

Additionally, we are measuring current volume and market momentum (again against the past 30/90 day averages) and putting those two values ​​together. Generally, when we see high buying volume on an active market on a daily basis, we conclude that the market is acting too greedy/overly bullish.

Information on social networks (15%)

Although our reddit sentiment analysis is not yet in the live index (we are still testing some market related keywords in word processing algorithm), our twitter analysis is run. There we collect and count posts on different hashtags for each coin (publicly, we only show those for Bitcoin) and test the speed and number of interactions which they receive within certain timeframes). The unusually high engagement rate leads to growing public interest in the coin and, in our eyes, corresponds to greedy market behavior.

Domination (10%)

The dominance of a coin is like the market capitalization of the entire cryptocurrency market. For Bitcoin in particular, we think Bitcoin's rise in dominance is due to the fear of (and thus a reduction in) over-speculative alt-coin investments, as Bitcoin increasingly becomes a safe haven of electronic money. On the other hand, as Bitcoin dominance shrinks, people are getting more and more greedy by investing in riskier altcoins, dreaming of their chances in the next big bull run. Anyhow, when analyzing the dominance of a coin other than Bitcoin, you could argue the opposite, as more interest in an alt-coin can lead to a bullish/greedy behavior for the cryptocurrency. with that particular currency.

Trend

We take Google Trends data for various Bitcoin related search queries and process those numbers, specifically the change in search volume and other popular searches mentioned. export. For example, if you check Google Trends for "Bitcoin", you may not get much information from the search volume. But for now, you can see that the query “manipulate bitcoin price” is currently up +1,550% in the relevant search queries box (as of May 29, 05). This is clearly a sign of fear in the market and we use that for our indicator.

Disclaimer

This should not be considered investment advice

The information provided on this website is not investment advice, financial advice, trading advice or any other form of advice and you should not consider any content of such website. . Alternative.me does not recommend that you buy, sell or hold any cryptocurrency. Do your own due diligence and consult your financial advisor before making any investment decisions.

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