Since the middle of May, right after the massive correction we had, the F&G index has been heavily leaning towards fear, as it was the best time to buy since people were selling everything they had expecting either a bear market or just an even bigger dip (their loss). But, as August rolled it's pretty face in sentiment slowly shifted into greed. As of right now the index is at 72 (Greed) and fortunately that doesn't spell the end for all our investments, yet.
This'll be a relatively short article when compared to my usual stuff but I wanted to share nonetheless.
For anyone that might not understand what this index is doing, how or why here's their explanation. And if you want more, go here.
Why Measure Fear and Greed?
The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:
- Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
- When Investors are getting too greedy, that means the market is due for a correction.
Therefore, we analyze the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means "Extreme Fear", while 100 means "Extreme Greed". See below for further information on our data sources.
Of course, none of this should be taken at face value, nor should it be used to as your guide on when to sell or buy. It's just a fun way to see what the current sentiment is and possibly prepare for changes that will likely happen eventually.
An important thing that this greed brings is an increase in prices, certain coins will skyrocket, like for example Solana today, which has me all giddy.
(For anyone viewing this at a different date, it was 37% for the day)
And SOL isn't the only currency to move, through the last week a lot of the top coins have moved 20% or more, all upwards. Only 2 coins in the top 100 haven't gone positive recently. This is of course a very shallow analysis, meaning it might not have any effect on the future movement of these coins, but it sure is nice to see these kinds of numbers if you're invested in any of them.
Since the sentiment has moved from fear it is obvious that there won't be many people selling off currently which should tell you that it might not be the best time to buy in. The index however isn't near any extremes, it's essentially in a middle phase where it's neither something to panic about nor something you should completely ignore as it could escalate to new levels in just a few days. So keep an eye out.
The last thing to note is that, afterwards, when the dust settles, there will most definitely be a correction, the only question is, how small or large will it be and when will it happen. We unfortunately will never really know, the last time a mayor dip happened the index was at 98 so if it is ever that high it should obviously sound some alarms in our heads. In any case, you shouldn't be caught of guard as anyone starting a YOLO right now will absolutely not have a good time. Anyone that has their investment planned out, keep to it, it'll all fall in place soon enough, and I'm sure a lot of you do have at least some plan in place currently.
The F&G index isn't the only sentiment measurer we have around, there are plenty of other sites to check out if you're interested further and I would of course still encourage you to research those as well.
Thanks for reading, hope you enjoyed it!
