What Is the Crypto Fear and Greed Index?

In the highly volatile Crypto Assets market, the Fear & Greed Index is hailed as the emotional compass for investors. This indicator quantifies market sentiment on a scale from 0 to 100: 0 represents extreme fear, and 100 represents extreme greed, divided into four key ranges:

• 0-24 (Extreme Fear)
• 25-49 (Fear)
• 50-74 (Greed)
• 75-100 (Extreme Greed).

Its core philosophy comes from Buffett’s famous saying: “Be fearful when others are greedy, and be greedy when others are fearful,” aiming to help investors seize opportunities in extreme market emotions.

How Does the Index Work? Multi-Dimensional Data Fusion Calculation

This index is developed by the platform Alternative.me based on the characteristics of the Crypto Assets market, calculated through six major weighted indicators (totaling 100%):

1. Volatility (25%): An abnormal rise in Bitcoin’s short-term volatility usually indicates market fear.
2. Market Momentum and Trading Volume (25%): Continuous rising trading volume may suggest the spread of greed sentiment.
3. Social Media Sentiment (15%): Analyzing interaction volume and keyword sentiment (such as “bull market” or “crash”) on platforms like Twitter/X.
4. Bitcoin Dominance (10%): Inflows into Bitcoin (increasing share) often reflect risk-averse sentiment, while a shift to altcoins indicates enhanced risk appetite.
5. Google Trends (10%): Changes in the popularity of searches for keywords like “Bitcoin crash” or “buy Crypto Assets.”
6. Surveys (15%, paused): Historical sentiment voting data.

Practical Significance: Extreme Emotions Often Serve as Contrarian Signals

• Extreme Fear (below 25): The market may be oversold, for example, in April 2025 when Trump’s tariff policy triggered panic, the index fell to 21-25, creating a potential buying opportunity.
• Extreme Greed (above 75): A warning of an overheated market, such as in March 2024 when Bitcoin broke through 68,000 USD, the index reached 90, followed by a correction.

Historical data shows that panic zones often correspond to price lows, while greed zones should be cautious of bubble risks.

Limitations: Not an all-purpose indicator, needs to be combined with other tools

1. Bitcoin Centralization: Mainly reflects BTC sentiment, the altcoin market may diverge.
2. Lagging: Relies on historical data, difficult to predict sudden black swan events (such as exchange hacking).
3. Version Differences: Different platforms (such as CoinMarketCap, Glassnode) have different weighting algorithms, results may vary.

Professional advice: Use in conjunction with on-chain data (TVL) and technical indicators (RSI) to avoid single reliance.

Conclusion: Rationally Navigating Emotional Waves

The Fear and Greed Index provides investors with a real-time snapshot of market sentiment, particularly valuable for strategic reference during extreme values. However, the Crypto Assets market is driven by multiple variables, and successful investment still requires a combination of fundamental analysis, risk management, and calm judgment. As the truth repeatedly validated by the market states: “Indicators are tools, but decision-making lies in the hearts of people.”