The Fear & Greed Index, an important gauge of investor sentiment, has reached a score of 73, indicating a state of 'Greed' in the cryptocurrency market.
What is the Fear & Greed Index?
Developed by Alternative.me, the Fear & Greed Index is used to assess the current mood in the cryptocurrency market. It is a composite score ranging from 0 to 100, where 0 signifies 'Extreme Fear' and 100 indicates 'Extreme Greed'. This index is calculated based on six key factors, each contributing to the final score.
What Does a Greed Level of 73 Mean for the Crypto Market?
A score of 73, despite a slight decrease, indicates a 'Greed' zone. Historically, such periods have often preceded market corrections, as excessive greed can lead to irrational investor behavior. This high index suggests a bullish sentiment in the market, but also an increased risk, prompting a need for portfolio reassessment.
How Does the Index Measure Market Volatility?
The index takes into account numerous factors that influence its score. Key among these is market volatility (25%), which analyzes the current price fluctuations of Bitcoin over the past 30 and 90 days. Other crucial factors include trading volumes (25%), social media activity (15%), surveys (15%), Google Trends (10%), and Bitcoin dominance (10%). The last factor measures Bitcoin's market capitalization relative to the overall cryptocurrency market cap.
With the current Fear & Greed Index at 73, caution is advised. Understanding the factors driving this index helps investors make more informed decisions in the volatile cryptocurrency market.
