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MASTERING THE FEAR AND GREED INDEX: A COMPREHENSIVE GUIDE TO USING IT
EFFECTIVELY

Tech Planet Author 10 minutes ago Follow


The crypto market is volatile and influenced by users' sentiments and emotions.
Users' behaviour pushes up and down prices, sometimes making crypto assets
overpriced and underpriced. Knowing current market sentiment helps to understand
current trends better and make predictions.

 * Should you buy or sell?
 * Is it a good time to enter or better to exit?
 * How may the price change?

The Crypto Fear and Greed Index indicates current market sentiment and users'
behaviour and helps to answer those questions.




WHAT IS CRYPTO FEAR AND GREED INDEX?

The Crypto Fear and Greed Index measures market sentiment. It is a scale from 0
to 100. 1 means crypto users are extremely fearful about the market and sell
their assets to bear minimum losses. Conversely, 100 indicates extreme greed
market sentiment and crypto users buying assets forced by fear of missing out
(FOMO).


HOW CRYPTO FEAR AND GREED INDEX CALCULATED?

The Crypto Fear and Greed Index is a comprehensive measure regarding various
factors to ensure accuracy.



The index considers the crypto market volatility and momentum and volume of the
Bitcoin market, comparing the 30-day and 90-day averages.

It measures Bitcoin's market dominance, representing the users' approach towards
altcoins. Higher Bitcoin dominance demonstrates the fear sentiment and low
confidence in altcoins, while lower Bitcoin dominance is a sign that users are
optimistic about the crypto market and buy altcoins.

Moreover, the index pays attention to social media as the crypto market depends
on social media buzz. The index measures Bitcoin's mentions and hashtags on
social media and compares them with average values.

And finally, the index conducts weekly surveys and studies the crypto users'
vision of the market and tracks Google Trends.


HOW TO USE CRYPTO FEAR AND GREED INDEX?

As with any other index or indicator, the Crypto Fear and Greed Index is
reasonable to use along with other metrics and charts to get more accurate
insights.

Generally, you can use the index to:

 * gauge the crypto market sentiment;
 * measure Bitcoin sentiment;
 * determine investor's mood;
 * indicate buying and selling opportunities;
 * pick exit and entry times.


HOW TO READ CRYPTO FEAR AND GREED INDEX

The scale represents several market states:

 * 0-24 — extreme fear;
 * 25-49 — fear;
 * 50-74 — greed;
 * 75-100 — extreme greed.

An extreme greed state means crypto users are optimistic about the market
because of growing prices. They actively buy altcoins declining BTC market
share, and the growing demand leads prices to rise even more. In this state, you
shouldn't enter the market, and better to exit and sell since the market is due
for a correction and, moving in the cycle, will go down.

On the opposite, extreme fear shows low confidence in the crypto market. Users
prefer to hold Bitcoin and sell altcoins. The fear drops prices and forces even
more fear sentiment. When prices are exceptionally down, it is a perfect time to
enter the market and buy assets waiting for the ending of the crypto winter and
raising your investments.


IN CONCLUSION

The Crypto Fear and Greed Index is useful for short-period predictions as it
shows current sentiment and helps make decisions and correct strategies. In a
long-term game, predicting future changes with the index's help would be
complicated.

 

CRYPTO BLOCKCHAIN CRYPTOCURRENCY BITCOIN ETHEREUM NFT ETH BTC DEFI

In case you have found a mistake in the text, please send a message to the
author by selecting the mistake and pressing Ctrl-Enter.

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