THECRYPTO.WATCH – For active crypto players, you must be familiar with Crypto Fear and Greed. Usually, these words are often the subject of conversation in the crypto community or shared on social media. So, what is Fear and Greed in crypto? Follow the next explanation.
What is Crypto Fear and Greed
Crypto Fear and Greed is a score used to describe crypto sentiment with a score ranging from 0 to 100. Unfortunately, it turns out that Fear and Greed can only measure Bitcoin, not all crypto , which are very large in number.
The score range from 0 to 49 is said to be Fear, which indicates that the market is undervalued and oversupply. So that is the right time to buy or buy the dip.
While the score range from 50 to 100 named Greed indicates that cryptocurrency is in a high state or may be in the middle of a bubble. It can even be a sign that the bull market period is coming to an end.
Please note that there are 5 kinds of components that can be used as a benchmark for Fear and Greed.
This component accounts for 25 percent of the total rating index. This component can look at today’s Bitcoin price and evaluate it by comparing it to the price of 30 to 90 days.
This component is used to assess bullishness in the market. Similar to volatility, the component of market volume or momentum accounts for 25 percent of the total valuation index, as well as looking at Bitcoin trading today. It then compares the 30 and 90 day averages, and then combines the results.
The social media component only accounts for 15 percent. Usually the social media used to measure is the hashtag from Twitter, which only focuses on Bitcoin. Then look at the speed and the number of interactions talking about Bitcoin.
This component only accounts 10 percent of the index, how big is the percentage of the overall crypto market capacity. An increase in Bitcoin investment means a decrease in Altcoin investment. Then Bitcoin is considered as an asset for safe investment.
This is the last component that accounts for 10 percent of the total index assessment. This component can be seen from Google trends, which can be seen by how many Bitcoin topics appear in it.
Those are the 5 components used to determine the amount of Crypto Fear and Greed. Even so, do not use it as the only benchmark for making decisions.