Fear and Greed Index
A market sentiment checker
The Fear & Greed index gauges the market sentiment of traders and here we are looking at the figure for the overall crypto market and not a single asset alone. Currently the figure stands at 22 for the month of March and the sentiment remains at its lows in the extreme fear territory.
The other chart represents the overall market sentiment w.r.t price action of past 3 months. It’s showing flat and sideway movement within an overall anxiety phase market. Not knowing which side the overall trend will pick, since the price is tightly consolidating currently between $45,000- $38,000 range, wiping out both Long and Short traders.
The above index is measured according to three data points:
- Price change in major crypto assets
- Volume for the underlying cryptocurrency
- Volatility (price fluctuations over time)
It does feel as if the retail side of the market had already resigned and quit, this is also showing up with the volume across crypto assets currently.
Yet, historically, when the crowds get substantially pessimistic and the indicator flashes Extreme Fear, it usually presents itself as a buying opportunity. (Not financial advice)
In all the past cycles and trends, it’s observed that the crowds are usually right when the trend is absolutely clear. This was observed before the blow-of-top in 2017 after Bitcoin touched almost $20,000 and retail was just buying coins without much thought. It’s usually. price action that we are witnessing in 2022 that most retail traders might get caught on the wrong side, because of their extrem bias.
This choppy Price-Action for sure is testing the retail traders’ patience at the moment, and the euphoria phase seems to have turned into Disbelief or Anxiety.