Investments in crypto projects bring enormous profits on the one hand, and bear high risks, on the other. It is all about the balance between supply and demand, a crucial driving force in the cryptocurrency market. The market is still very young and emerging, so it is very sensitive to such factors as:
- news background;
- global economy;
- investors’ sentiment.
In this article, we would like to discuss the importance of the sentiment factor and crypto fear and greed index, as well as offer you the best crypto exchange platform for trading.
What is a Fear and Greed Index?
There are many emotions in crypto traders’ behavior in the unstable and changeable digital coins market. Take, for instance, Bitcoin – the market’s leader and driving force for trends. When the BTC value is growing, people rush to buy it; otherwise, they experience an extremely strong feeling of FOMO (missed chances) because they want to buy coins and earn from their rice growth. When the BTC rate drops, people leave the market in a panic and sell out their assets as soon as they see red crypto charts. So we dare to say that it is extremely easy to “rule” people’s behavior and create a buzz or panic around crypto. Here the BTC fear and greed index comes to help, for it helps investors to avoid the stage when they act irrationally and prevents them from making emotional decisions.
How is the Crypto Fear and Greed Index Used?
Like any other digital asset, Bitcoin is highly volatile, and it is often hard to foresee the next price movement. Identifying the asset’s index allows traders to evaluate and measure the current market participants’ mood and find answers to the question of whether it is worth buying or maybe better to sell crypto. So the Bitcoin fear and greed index is a scale from 0 to 100, where zero means the level of fear is maximum, and 100 means the feeling of greed is prevailing. So, the closer the index to zero, the more fear investors feel about the asset’s future price, which means they will likely leave the market. The closer the index to 100, the more optimistic its participants, so the more confident they feel about eh asset’s growth in the future, which means the demand for coins will maintain and its price will increase. Thus, the index helps evaluate the present investors’ sentiment, and you can decide based on this index.
To trade and invest in digital assets, we recommend the WhiteBIT platform – the trusted exchange with a variety of investment tools and a high safety level.