Fear & Greed Index Explained
Be greedy when others are fearful. Here's how we use crowd sentiment.
What you'll learn
- 1. What the Fear & Greed Index actually measures
- 2. Why we use it as a contrarian signal (not a trend follower)
- 3. How it affects our crypto signal calculations
What Is the Fear & Greed Index?
The Crypto Fear & Greed Index measures market sentiment on a scale of 0-100. It's calculated daily from:
- • Volatility — How much is the market swinging?
- • Volume — Are people buying or selling heavily?
- • Social media — What's the mood on Twitter/X?
- • Surveys — What do traders expect?
- • Bitcoin dominance — Is money fleeing altcoins?
Source: Alternative.me — updated daily, free data.
Reading the Scale
Here's what the index looks like at different levels:
Investors are panicking. Historically, this is when patient buyers find opportunities.
Cautious sentiment. Markets are nervous but not capitulating.
Balanced sentiment. No strong contrarian signal either way.
Optimistic sentiment. Markets are confident but not euphoric.
Euphoria. Everyone is bullish. Historically, corrections follow.
Why We Use It as a Contrarian Signal
Most traders use sentiment as confirmation: "Greed is high, so I should buy!" This is backwards.
"Be fearful when others are greedy, and greedy when others are fearful."
Here's our logic:
How It Affects Our Signals
Fear & Greed acts as a modifier on our crypto signals:
| F&G Level | Technical Signal | Final Output |
|---|---|---|
| ≤20 (Extreme Fear) | Neutral | → Bullish |
| ≤20 (Extreme Fear) | Bearish | → Neutral |
| ≥80 (Extreme Greed) | Neutral | → Bearish |
| ≥80 (Extreme Greed) | Bullish | → Neutral |
| 21-79 (Normal) | Any | No change |
This is why you might see "Bullish" during a drawdown—if fear is extreme, we're positioning for the recovery.
Limitations
It's not a timing tool. Markets can stay irrational longer than you can stay solvent. Extreme fear can get more extreme.
Crypto-only. This index specifically measures Bitcoin/crypto sentiment. It doesn't apply to forex or stocks.
Threshold matters. We only use it at extremes (≤20 or ≥80). Normal readings (30-70) don't trigger any override.
See Current Fear & Greed
The live Fear & Greed reading is displayed in the macro bar on our crypto page.
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