Investors Must Know, Know What is Fear and Greed Index in Crypto

Liputan6.com, Jakarta In an analysis of the crypto market, the term Greed and Fear Index often appears, so what does this index mean?

According to Investopedia, the Fear and Greed Index was originally developed by CNN Business to measure how emotions affect how much investors are willing to pay for stocks.

The index is calculated daily, weekly, monthly, and yearly and is based on the logic of too much fear driving down stock prices, and too much greed driving up prices.

Meanwhile, the Crypto Fear and Greed Index is a score that describes crypto market sentiment with a score ranging from 0 to 100. However, it should be noted despite its name, the Crypto Fear and Greed Index only measures Bitcoin, not the crypto asset market as a whole.

How the Fear and Greed Index Works

In this index there are several indicators that show how Bitcoin is. Fear (score 0 to 49) indicates an undervalued and oversupply market, which can signal a good time to buy, or to buy the dip.

While Greed (a score of 50 to 100), indicates the cryptocurrency is overvalued and may be in the midst of a bubble or bubble. This can be a sign that the bull market period may end soon.

When deciding whether to enter or exit the crypto market, the Fear and Greed Index can be a reference for setting trading strategies. Even so, it’s better to keep using other analysis techniques and not just rely on this index.

Basically, the Crypto Fear and Greed Index is a useful tool for understanding market sentiment. As well as being easy to read, the Fear and Greed Index takes into account various components, from volatility to keyword search volume on search engines.

However, it should be noted that the volatility of the Bitcoin price can cause very sharp changes in the Index in a very short time. So, this index should not be your only benchmark in making investment decisions, although it can be a source of reference.

Disclaimer: Every investment decision is in the hands of the reader. Study and analyze before buying and selling Crypto. Liputan6.com is not responsible for profits and losses arising from investment decisions.