What is Crypto Fear and Greed Index, And Here’s Why You Should Keep Tabs on It

The index is automatically updated in real time and can be checked at any time of the day through a simple Internet search.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 20 November 2023 13:51 IST

What is Crypto Fear and Greed Index, And Here’s Why You Should Keep Tabs on It

Photo Credit: Unsplash/ Kanchanara

The crypto fear and greed index is marked between zero and a hundred

Highlights

The zero mark on the index signifies extreme fear
The hundred mark on the index represents extreme greed
Volatility and social media outlook can influence fear and greed index

Investments in cryptocurrencies could be risky given that the market of digital assets remains more volatile than stable on a day-to-day basis. There, however, are parameters that can be analysed by those looking to invest in order to place their bets as safely as possible, minimising financial risks. The crypto fear and greed index is one such parameter. Primarily based on Bitcoin, the crypto fear and greed index gives a sort of measurement on the overall investor sentiment around the crypto market. The index is automatically updated in real time and can be checked at any time of the day through a simple Internet search.

The index is divided between the marks of zero to hundred. While zero signifies extreme fear, hundred is the mark of extreme greed. When the crypto fear and greed index is less that 50 points, its inclining towards the fear category. This implies most crypto investors in the market are selling. Meanwhile, when the index pointer exceeds the mark of 50, it signifies the greed sentiment hovering over the crypto sector, making investors want to buy more crypto.

🧭 #Crypto Fear & Greed Index #cryptocurrency pic.twitter.com/poj28oDLI8
— 1ATH.Studio (@1ATHStudio) November 20, 2023

When the crypto market is rallying with gains, the greed or buy sentiment is high and when the crypto market is grappling with losses, the fear or sell sentiment picks pace. The fear and greed index measures the present volume and momentum of crypto transactions against monthly and quarterly averages.

When the point is low on this index, say below 30 -- this may signal that the crypto price is expected to increase in the coming days. Likewise, if the index value is high, say close to 90, it could indicate that the prices of crypto assets could see notable dips in the coming days.

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Other factors that contribute to the automated compilation of this index includes volatility status as well as social media outlook.

Market analysts often advise new investors to make monitoring the crypto fear and greed index part of their research routine before planning to invest a hefty amount on any crypto asset.

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Further reading: Cryptocurrency, Fear and Greed Index

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More