Crypto Fear & Greed Index

Index: alternative.me

How the Index Works

The Crypto Fear and Greed Index, a key gauge of investor sentiment in crypto markets, has quickly become a fixture of the trading landscape. First launched by Alternative.me to provide a snapshot of Bitcoin investors' emotions, the index assigns a score from 0 to 100, with 0 being "Extreme Fear" and 100 signifying "Extreme Greed."

At its core, the index relies on a blend of five main factors: market momentum, volatility, derivatives market signals, market composition, and CMC proprietary data. An unusual rise in volatility, in particular, is considered an indicator of a fearful market.

The index is available on CoinMarketCap as well as through CMC API routes for traders. Since its 2023 launch by CoinMarketCap to capture overall market emotions beyond just Bitcoin, the tool has gained even more traction with traders looking for a quick take on market mood.

How to Read it: Theory and Practice

But what does a Fear and Greed score actually mean in practice? For starters, it's a gauge of market emotions, not a timing tool. It measures what traders are doing now rather than forecasting what happens next.

Extreme Fear is defined as scores between 0 and 24, downgraded to "Fear" between 25 and 49. Historically, extreme fear has coincided with market bottoms, while sustained periods of high greed have tended to appear closer to market peaks.

Indeed, the crypto Fear and Greed Index is subject to some limitations. Still, its reflection of market mood now makes it an essential add-on to any crypto investor's analytic toolkit, offering a unique angle on the flow of emotions that drive crypto prices.