The Crypto Fear & Greed Index has garnered attention from investors, hitting 79 and entering the 'Extreme Greed' zone. This shift raises critical questions about the market's future.
What is the Crypto Fear & Greed Index and Why Does it Matter?
The Crypto Fear & Greed Index, developed by the Alternative platform, serves as an indicator of sentiment in the cryptocurrency market. It ranges from 0 to 100, where 0 denotes 'Extreme Fear' and 100 'Extreme Greed'. This index can help investors understand the overall psychology of market participants.
How is This Index Calculated?
The index is calculated based on six factors: volatility, market volume, social media activity, surveys, Bitcoin dominance, and Google Trends. Each factor carries a specific weight, providing a comprehensive view of market sentiment.
Surge to Extreme Greed: Consequences
With a reading of 79, the market falls into the 'Extreme Greed' category, which may foreshadow corrections or significant price drops. At this level, exacerbating phenomena such as FOMO, high liquidity, and neglecting fundamental factors can occur.
The current reading of the index at 79 highlights the rising optimism in the cryptocurrency market. However, investors should remain cautious and consider profit-taking and risk management during periods of 'Extreme Greed'.
