Utilizing the Fear & Greed Index involves understanding market psychology and determining the best times to enter and exit trades, especially in the cryptocurrency market.
Here’s how:
📌 1. In the case of "Extreme Fear" (0–25):
✅ Buying opportunity:
The market is at a bottom or close to it. Many people are selling out of panic.
As a smart investor: you start accumulating (gradual buying) in strong projects.
Example:
During times of price crashes, like Bitcoin dropping to 16K, the index was below 20 — and those who bought then made huge profits later.
📌 2. In the case of "Extreme Greed" (75–100):
⚠️ Likelihood of a major correction.
Investors rush to buy without thinking — creating a "bubble".
As a smart investor: you start taking profits or reduce the amount at risk.
Example:
If a coin reaches its ATH (All-Time High) and the index is at 90, it’s best not to enter and instead look for partial selling.
📌 3. In the "Gray Area" (40–60):
The market is relatively balanced, and your technical analysis should be the basis.
Good for short trading (scalping) or gradual investing.