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What is the Fear & Greed Index? Dead Cat Bounce Indicators - The State of Bitcoin

By Keeef | CryptoFactor | 15 Dec 2021


Elizabeth Warren - Crypto Expert for hire

Senator Elizabeth Warren, the Democrat US Senator for the State of Massachusetts has been reported to have said during a hearing the Senate Banking Committee:

“DeFi is the most dangerous part of the crypto world,” said Warren. “This is where the regulation is effectively absent, and — no surprise — it’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders. In DeFi, someone can’t even tell if they’re dealing with a terrorist.”

If you define terrorism as the use of violence or the threat of violence in the pursuit of political, religious, ideological or social objectives, then perhaps the terrifying inflationary world reserve currency of the US Dollar would also come under the Senator's 'definitely not paid for statement' regarding dangers of currencies.  It appears that Senator Warren has already falsely claimed to be a Native American to advance her political objectives, so I think it fair to be sceptical of her moral integrity. 

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You could ask yourself if scammers, cheats and swindlers exist in the financial system outside of the crypto space? Certainly yes! And, why do institutions fear DeFi? Perhaps because it being decentralised means a loss of control and profit from the current system.  It is for these same reasons that DeFi (Decentralised Finance) is appealing to those outside of its beneficial sphere of control.  

I only wanted to mention this, because it goes to show the depths that traditional finance can sink to spread FUD (Fear, Uncertainty and Doubt), and so on to The State of Bitcoin.

The State of Bitcoin

It remains true, that when fear and uncertainty plagues the Bitcoin ($BTC) Market, there is little to no point in focusing on Technical Analysis for the Alt-Coin as if BTC suffers, all bets are off for Alt-Coins.

Overnight, BTC has bounced 3% to reclaim the $48,000 and 50-week Moving Average, which I was pleased to see after having bought the dip and taken advantage of the Bitcoin, Algorand and Cardano discounts that have been on offer the last few days.  I anticipate that nothing much will happen for the next few weeks to possibly months and that Bitcoin will likely trade sideways until fear leaves the market.  We may well see a further dip and down to the $40,000 level, however, I'm not too worried. The fundamentals remain:

  • Whales are buying after manipulating the price down
  • US Bitcoin ETF remains possible
  • Institutional money is coming into the market
  • Adoption of crypto is prevalent 
  • The Senate last night voted AGAIN to raise the debt ceiling, meaning continued money printing, devaluation of the US Dollar and continued inflation.  This was just after inflation reached a 40-year high. 
  • The big money wants you out of the market so they can accumulate
  • We are still in a bull market
  • We are in a lengthening market cycle

What is the Fear & Greed Index?

Today the Bitcoin Fear and Greed index sits at a low of around 28/100. The Fear and Greed Index is a measure of market sentiment, ranging from 0 (Extreme Fear) to 100 (Extreme Greed) whenever this scale tips beyond 80/100, a correction to the downside are due as an asset has become overbought. Conversely, a score below 20/100 means the asset has been vastly oversold and therefore represents good value and a correction to the upside is likely.  

It is compiled by analysts by looking at and interpreting several factors, including:

  • Volume
  • Volatility
  • Sentiment - From Social Media posts, Surveys and Trends 
  • Market Dominance

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The Fear & Greed Index provide a useful tool, and as you can see from historical data, whenever the fear index sits below 20/100 for a brief period, a sharp upward correction follows in time.  This again is a good tool to help keep your head level when there's blood on the street and panic has set in.  I'm accumulating Bitcoin and other alt-coins that I plan to hold on to long term, whilst they remain on sale! BTFD.  

I publish regularly right here on Publish0x and on Reddit.  Please do remember that none of the above is financial advice, you should always do your due diligence.  

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Keeef
Keeef

Cryptocurrency Journalist, Enthusiast and Commentator


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