Fear & Greed Index
The Fear & Greed Index is a tool that measures the emotional state of the crypto or financial markets by analyzing investor behavior and sentiment. It helps determine whether traders are acting out of fear or greed, providing insight into potential market turning points.
How It Works
The index pulls data from various indicators—like volatility, momentum, volume, social trends, and surveys—to generate a score from 0 (extreme fear) to 100 (extreme greed). A low score may suggest panic-driven selling, while a high score could signal irrational exuberance.
Why It Helps Traders
Understanding crowd psychology is key in volatile markets. Investors often use the Fear & Greed Index to identify contrarian opportunities—buying when others are fearful and being cautious when others are greedy.