To Fear or Not? The Fear and Greed Index

With the rise of crypto comes a lot of speculation, and with speculation comes the fear of losing all your money. The market was high on euphoria when Bitcoin hit it's new All-time high on November 10th. The fear and greed index score the day before? It was 84. The index is a good short term indicator on market setiment. The markets do have phases of Extreme Fear and greed, use this to your advantage to make wise decisions and not shoot at the hip ones with your portfolio.

It's pretty interesting how the score is calculated. I keep some of the same considerations in thought when trading crypto. It's scored as followed:

Volatility- 25%, A quarter of the index is measured by volatility, it measures the current price of Bitcoin and compares the 30 and 90-day averages
Momentum/Volume-25%, current trading volume and momentum compared to 30 and 90-day averages then combining the result.
Social Media-15%, takes in consideration of Twitter hashtags as well as speed and number of interactions. Higher than normal interaction rate means the market is greedy.
Dominance- 10%, BTC Total share of crypto market capitalization.

All good metrics for market setiment, which is why I refer to it daily.

I recommend taking a look at this when you trade to help keep yourself in check even, emotions can cloud judgement which is why you need a trading plan to follow.

What do you think of the Fear and greed index, do you use it, will you start looking at it?

Comment down below what you think!

Thanks as always.

****Featured Image was created with AI, asked to create an image virtualizing fear and greed, made with hotpot.ai"***

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