The emotions surrounding the crypto market might be a crucial sign for investors. However, there are a lot of factors that need to be taken into account to calculate the Fear and Greed Index.
The 5 Markers of Fear vs Greed Index
- Volatility – the current levels of volatility are being analysed and compared to the stats of the previous month and the last 90 days. Increased volatility usually means rising fear in the crypto market.
- Social media – monitoring social media networks is very important to calculate the Crypto Fear and Greed Index, as the high interaction rate always leads to increased public awareness of cryptocurrency, which usually means increased greediness in the market.
- Market volume – the total market capitalization and the momentum of the last 90 days, including buying sentiment and overall activity can determine whether investors are acting overly greedy or whether they’re likely to sell out.
- Dominance – the overall percentage of how much the coin takes up in the general market cap. This metric is most sensitive to Bitcoin. For instance, if Bitcoin (BTC) is rising in dominance, it might mean that public trust in altcoins has decreased.
- Trends – Google Trends data shows trending searches and the dynamic changes that surround search volumes. The rising queries can mark a bullish or bearish sentiment. For instance, the ‘Bitcoin price drop’ is a clear indicator of fear among crypto investors.
Extreme Fear = Buying Opportunity?
According to current trends, the Crypto Fear & Greed Index is 7, which is just 7 points away from max extreme fear. Plus, it’s the longest consecutive run for extreme fear in the history of this metric, as it’s 58 subsequent days already. Furthermore, the level of extreme fear was at 11, which means the chaos in crypto prices during the last week might have pushed the panic button.
However, as the crypto Fear and Greed index site says, the Extreme Fear indicator might suggest that it’s a good time to buy. However, it might not apply for all of the top crypto currencies, as altcoins usually have very different circumstances than Bitcoin (BTC) and Ethereum (ETH).
Bitcoin Keeps on Falling, Ethereum Barely in 4-digit Zone
At the time of this writing, Bitcoin (BTC) is trading at $21,109.25, which still shows the damage done by the most recent crypto market turmoil (30% down in the last 7 days). In contrast, a bullish pattern for this Thursday can be seen as the price spiked by 3.9% in the last 24 hours.
On the other hand, Ethereum (ETH) is trading at $1115.5 at press time, which is also 37.8% less than a week ago. Similar to the BTC situation, ETH has managed to get back 5.8% since the drop 24 hours ago. Nevertheless, Ethereum (ETH) is still in the red by 44.7% if compared to its market price a month ago.
As a plentiful amount of reports of whales buying BTC and ETH surface on the net, it looks like the top two digital assets in the crypto market are at a tempting price for purchase, but crypto enthusiasts are not sure how long this windy crypto winter will last, as there are numerous outside-the-market factors, such as war in Ukraine and US dollar inflation.