What is the fear and greed index in cryptocurrencies and how to interpret it | Technology – Central Valley Business Journal

Fear and greed in the crypto world have a simple interpretation. According to many analysts, when fear is high, it could be a good time to buy, while when greed increases, it is a good time to sell and liquidate positions.
The cryptocurrency market has a very emotional behavior, that’s how it is. People tend to get greedy when the market is going up and start selling everything when they see their cryptocurrencies crash. With the index of fear and greed it seeks to avoid making emotional decisions.
But nevertheless, This index is not intended to function as a direct buy or sell signal.but a compass for investors in this market. It takes into account the price of the currency, its volatility, its volumes and dominance in the market, as well as the sentiment of social networks (Reddit and Twitter) and search engines to establish levels.
A BitcoinFear tweetAs an example, it reveals that the current market sentiment is 37 out of 100 in relation to this currency. Keep in mind that 100 is considered as extreme greed and zero as extreme fear.
Bitcoin Fear and Greed Index is 37 – FearCurrent price: $ 50,848 pic.twitter.com/pnqRhV1Loi
– Bitcoin Fear and Greed Index (@BitcoinFear) December 26, 2021
When the market is in a state of extreme greed, the price increases because more and more people buy. However, investors take advantage of extreme greed to sell, following a basic investment principle of buying low and selling high.
Extreme greed is also an indicator for smart investors to know when the market is usually oversaturated.
Ethereum Fear and Greed Index is 45 – NeutralCurrent price: $ 4,063https: //t.co/KGutFErhoJhttps: //t.co/8r9QIYLM10 pic.twitter.com/SQ1dwLgFUA
– Ethereum Fear and Greed Index (@EthereumFear) December 27, 2021
When the market is in a state of extreme fear, the price of the asset is usually bearish, since investors usually sell due to panic. Smart investors, however, can use the situation to their advantage by buying more of the asset when it is at what is known as discount prices.
Extreme fear can also be used with the RSI (Relative Strength Index) to determine the best buy points in the event of a reversal. However, it is not a clear indicator either, as the asset may remain bearish.
Market sentiment regarding cryptocurrencies or stocks are important tools that help investors determine what the general consensus is. This often helps dictate whether or not big moves are going to be made, if the price is going to drop, how strong the asset is, and more, which is why it’s quite interesting to keep in mind.

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Copyright © 2017 JNews.

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