The Crypto Fear and Greed Index was created to analyze the current sentiment of the Bitcoin market and produce an estimated score ranging from 0 to 100. Zero means \’Extreme Fear\’ while 100 means \’Extreme Greed\’.
Extreme fear can be a sign that investors are apprehensive to engage while extreme greed indicates that the market is due for a correction.
The index gathers data from five different sources
- Volatility (25%)
Calculated from the volatility and maximum drawdown of Bitcoin’s price, compared to the 30-day and 90-day average volatility. An unusual rise in volatility is a sign of a fearful market.
- Market Momentum/Volume (25%)
Calculated based on momentum and trading volume like volatility, by comparing the 30-day and 90-day moving averages. When there is a strong volume on the buy side when the market is up. This translates to investors’ greed in the market.
- Social Media (15%)
Data is gathered from Twitter where various hashtags and posts are counted while checking how fast and how many interactions they receive in certain time frames. An unusually high interaction rate results in a grown public interesting in the coin and corresponds to a greedy market behavior.
- Surveys (15%) – Currently paused
Weekly crypto polls are conducted to ask people how they see the market. Sample sizes varied from 2000 – 3000 entries.
- Dominance (10%)
The dominance of a coin resembles the market cap share of the whole crypto market.
- Trends (10%)
Google Trends data for various Bitcoin related search queries are assessed and evaluated, especially the change of search volumes as well as recommended other currently popular searches.