Okay so you've probably seen people talking about the "Fear and Greed Index" and wondered what the that even means. Let me break it down for you in simple terms.
Basically, it's a number from 0 to 100 that tells you how people are feeling about crypto right now. That's it. Sounds simple, but it's actually pretty powerful when you know how to use it.
Here's how it works:🔥0-24 = Extreme Fear
Everyone's panicking. People are selling everything. Your timeline is full of "crypto is dead" posts. This is when most people are too scared to buy.
🔥25-49 = Fear
Still scary out there but not full panic mode. People are nervous, checking their portfolios less because it hurts to look.
🔥50 = Neutral
Nobody really cares. Market's boring. No one's talking about crypto. This is actually pretty rare.
🔥51-74 = Greed
Things are pumping. People are getting excited. Your uncle who said crypto was a scam is now asking you how to buy Bitcoin.
🔥75-100 = Extreme Greed
Everyone thinks they're a genius. Moon boys everywhere. People are taking out loans to buy crypto. Your barber is giving you #altcoins tips 😂
Here is How they calculate it:The most popular one is Alternative.me and they look at stuff like:
Volatility (25% of the index) - how much the market is swinging
Market momentum and volume (25%) - how much buying and selling is happening
Social media (15%) - what people are posting about crypto
Surveys (15%) - what investors say they're doing
Bitcoin dominance (10%) - Bitcoin's share vs all other cryptos
Google Trends (10%) - what people are searching for
Then they combine it all into one number that updates daily and here is Why this actually matters
The crypto market is SUPER emotional. Like way more than stocks or anything else. And emotions make people do dumb things with their money.
When the index shows Extreme Greed (like 80-90), that's usually when the market is about to top out. Why? Because everyone's already bought. There's no one left to pump it higher. That's when smart money starts selling to all the new people FOMOing in.
When it shows Extreme Fear (like 10-20), that's usually near the bottom. Everyone's already sold. People are terrified. And that's exactly when smart money is buying everything at a discount.
Real example:
Remember when Bitcoin hit around $69k in November 2021? The Fear and Greed Index was showing Extreme Greed - like in the 80s and 90s. Everyone thought $100k was coming next week. Then it dumped all the way down to around $15-16k by late 2022.
During that crash? The index was showing Extreme Fear for months. Like down in the teens and 20s. Everyone was saying crypto was done, it was over. But that was literally the best time to buy because Bitcoin eventually recovered.
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