Crypto Fear and Greed Index explains market sentiment

The Crypto Fear & Greed Index is a sentiment indicator that measures the emotional state of the cryptocurrency market on a scale from 0 to 100. A score below 50 indicates market fear, while a score above 50 indicates greed. Extreme readings, typically below 25 or above 75, are considered the most significant for identifying one-sided market positioning.

Major providers of this index include Alternative.me, which primarily utilizes Bitcoin signals, and CoinMarketCap, which offers broader asset coverage. The index is calculated by aggregating several data inputs, including market volatility, momentum, trading volume, social media sentiment, Bitcoin dominance, and Google Trends.

Professional traders typically use the index as a single data point within a broader strategy rather than a standalone signal. It is often integrated with technical analysis, on-chain data, and price action to identify potential overbought or oversold conditions driven by retail sentiment.