What Is the Fear & Greed Index?
The Fear & Greed Index is an indicator that expresses cryptocurrency market sentiment on a scale from 0 to 100. A reading close to 0 indicates extreme fear in the market, while a reading close to 100 indicates extreme greed. The index was inspired by Warren Buffett's famous quote: "Be fearful when others are greedy, and greedy when others are fearful."
Components of the Fear & Greed Index
The Fear & Greed Index is derived from multiple data sources, each weighted at a fixed proportion.
- Volatility (25%): Current volatility and maximum drawdown are compared against 30-day and 90-day averages.
- Market Momentum / Volume (25%): Current trading volume is compared against 30-day and 90-day averages to gauge market activity.
- Social Media (15%): The volume and sentiment of cryptocurrency-related mentions on Twitter, Reddit, and similar platforms are analyzed.
- Surveys (15%): Results from investor sentiment surveys are incorporated.
- Bitcoin Dominance (10%): Changes in BTC's market share are tracked.
- Google Trends (10%): Changes in search volume for cryptocurrency-related terms are analyzed.
How to Read the Fear & Greed Index
The Fear & Greed Index represents the state of market sentiment across several ranges.
| Value | State | Meaning |
|---|---|---|
| 0–24 | Extreme Fear | Investors are excessively fearful. Historically, this has sometimes presented buying opportunities. |
| 25–44 | Fear | Market sentiment is negative. Downward price pressure is present. |
| 45–55 | Neutral | The market is in a wait-and-see mode, searching for direction. |
| 56–74 | Greed | Investor sentiment is starting to overheat. Exercise caution with new entries. |
| 75–100 | Extreme Greed | The market is overheated. Prepare for a possible correction. |
How to Use It for Investing
The core principle of using the Fear & Greed Index in investing is contrarian thinking. During extreme fear (0–24), the market may be oversold, which can make dollar-cost averaging worth considering. During extreme greed (75–100), taking profits or avoiding new entries may be prudent. That said, it is important not to make investment decisions based on this index alone — use it alongside other indicators such as the Kimchi Premium, liquidation data, and trading volume.
Checking the Fear & Greed Index on TradeHub
The TradeHub dashboard provides the Fear & Greed Index in real time via an intuitive gauge chart. You can view the current value alongside yesterday's, last week's, and last month's readings, allowing you to track shifts in market sentiment at a glance.
