The Crypto Fear & Greed Index provided by Alternative.me has surged by 28 points to 72 as of February 4, transitioning from the Fear zone to the Greed zone.
How the Crypto Fear & Greed Index Works
The index reflects market sentiment. 0-24 indicates Extreme Fear, 25-49 represents Fear, 50-74 denotes Greed, and 75-100 is Extreme Greed. With the index at 72, the market has entered the Greed phase, signaling increased confidence among traders in crypto price appreciation.
Factors Driving Market Optimism
Several elements are boosting optimism in the crypto market: - Bitcoin's price stability and high demand for ETFs attract institutional investors. - Increased interest in altcoins such as Ethereum and Solana fuels enthusiasm in the DeFi sector. - Macroeconomic factors and Federal Reserve expectations are incentivizing risk asset investments.
How the Crypto Fear & Greed Index Is Calculated
The index is calculated based on six key indicators, each with differing weights: Volatility (25%), Market Momentum/Volume (25%), Social Media Sentiment (15%), Surveys (15%), Bitcoin Dominance (10%), and Google Trends (10%). All indicators point toward enhanced market sentiment.
The rise of the Fear & Greed Index to 72 indicates a significant boost in sentiment and growing confidence among traders in further cryptocurrency price gains. However, excessive optimism may precede market corrections.
