Introduction –

The most important thing that you should know is that, fear and greed index is a sign that sees or evaluates and creates a number which is between 0 -100, where number 1 is the indicator of great fear and 100 is the indictor of too much greed. Great fear shows that investors in the market are giving away or selling and it shows that traders are in a mood to purchase more. The plain rule of thumb, which the index follows is that, when market is high, the tendency to gather cryptos is high or more, which means that individuals are greedy and this leads to rise in the price movement. Learn here more on, mgf tokens. Similarly, the market also crashes, and investors begin to sell which in turn leads to selling in a panicky way and also, reflects a minus direction.

About Market Sentiment –

Besides all of that, the index also, measures the market emotions of the cryptos and its dynamics which should be very clear by now. It is based on 2 simple assumptions – I) the fewer the score, the more the fear. Traders are more fearful about the bitcoin future. And, it can be a good buying chance. II) the high the score, the better the investor feels about the bitcoin future. It means that crypto market is apt for making profit or correcting it. Besides all of that, this index is mainly dependent on the factors like market volatility, dominance, or volume, social media sentiment, surveys and searching information in connection to Bitcoin.

Fear & Greed of Bitcoin –

Let’s know more about the Fear and Greed of Bitcoin with examples. The first instance is of extreme fear. Bitcoin stopped 2 months low after FTX had fallen out in November 2022, the bitcoin Fear and Greed index showed a value of 12, which means there is extreme carefulness zone in the market. Next, is the instance of extreme greed. Bitcoin increased abruptly on the broadcast of Musk’s announcement of huge investments in Bitcoin by Tesla in February, 2021, the index raised to w hopping 92 out of 100, which shows extreme greed for in the market. If we read the present example of Bitcoin, which was trading or working in, ‘fear’ since the mid-2022, has finally come in the range of $20,000, thus moving out from. ‘fear’ to normal after a gap of some months.

Factors Affecting Fear and Greed Index –

Volatility is one such factor that affects the fear and greed index. In great volatility situations, the fear tends to be high and the cost fluctuations depict less interest among the traders as a curious market. The fear and greed index will measure volatility of the market and then it will do a comparison with average of the last month or in 90 days. Besides all of that, other factors affecting the fear and greed index are volume, social media, surveys and so on.