The Fear and Greed Index is a tool that measures market sentiment towards cryptocurrencies on a scale of 0 to 100, with low numbers indicating fear and high numbers indicating greed.
1. Extreme Fear (0-24):
Reflects excessive anxiety among investors, leading to heavy selling and price declines.
2. Fear (25-49):
Shows that the market is hesitant and unstable, with moderate price declines.
3. Neutrality (50):
Expresses a balance between fear and greed, with no clear trends.
4. Greed (51-74):
Reflects rising prices as a result of investors’ enthusiasm for buying.
5. Extreme Greed (75-100):
Indicates excessive enthusiasm, which can lead to significant price increases and the formation of bubbles.
Influencing Factors:
Price Volatility: High volatility increases fear.
Trading Volume: Increased trading is associated with greed.
News and rumors: strongly influence market sentiment.
Usage:
Fear: Buying opportunity due to falling prices.
Greed: Warning of price corrections and possible selling.
The indicator helps to understand the general market sentiment to make appropriate investment decisions.$SOL