What is the Fear & Greed Index?
The Crypto Fear & Greed Index is a sentiment indicator that measures the overall emotional state of the cryptocurrency market on a scale from 0 (Extreme Fear) to 100 (Extreme Greed). It aggregates multiple data sources to gauge whether the market is fearful or euphoric.
The concept is based on the famous Warren Buffett quote: "Be fearful when others are greedy, and greedy when others are fearful." When the market is in extreme fear, it often represents a buying opportunity. When in extreme greed, it suggests a potential top.
The stock market is a device for transferring money from the impatient to the patient.
Fear & Greed Zones Explained
Extreme Fear
Market panic. Capitulation selling. Historically the best time to buy.
Signal: Strong Buy OpportunityFear
Investors are worried. Price declining. May still have room to fall, but value appearing.
Signal: Accumulation ZoneNeutral
Balanced sentiment. Neither fearful nor greedy. Market in equilibrium.
Signal: Wait for Directional SignalGreed
Optimism rising. FOMO beginning. Prices may be getting stretched.
Signal: Take Partial ProfitsExtreme Greed
Euphoria. "Number go up" mentality. Everyone's a genius. Historically precedes corrections.
Signal: High Risk — Reduce ExposureHow the Index Is Calculated
The Crypto Fear & Greed Index uses multiple data sources, each weighted differently, to produce a single sentiment score:
Volatility
Compares current BTC volatility and max drawdown to 30/90-day averages. High unusual volatility = fear.
Market Volume
Compares current volume to 30/90-day averages. High buying volume in a rising market = greed.
Social Media
Analyzes Twitter/X hashtag activity, post volume, and interaction rates for crypto-related topics.
Surveys
Weekly crypto polls gathering direct sentiment from traders (currently paused by some providers).
BTC Dominance
Rising BTC dominance = fear (flight to safety). Falling dominance = greed (risk-on altcoin speculation).
Google Trends
Search volume for crypto-related terms like "Bitcoin crash" (fear) or "buy crypto" (greed).
How to Use Fear & Greed for Trading
1. Contrarian Strategy (Most Effective)
Buy when others are fearful, sell when others are greedy. The most historically profitable approach.
2. Scaled Entry/Exit
Rather than timing the exact bottom or top, scale in and out based on the index level.
3. Confirmation Filter
Don't use Fear & Greed as a standalone signal. Use it to filter and confirm other trading signals.
Historical Signal Performance
The Fear & Greed Index has a strong track record of marking major market turning points:
COVID Crash — Index hit 8 (Extreme Fear)
BTC dropped to $3,800. The index hit single digits — historic extreme fear. BTC rallied to $65,000 over the next 13 months (+1,600%).
Buying at fear: +1,600% returnBTC All-Time High — Index at 84 (Extreme Greed)
BTC hit $69,000 with extreme greed readings for 3+ weeks. This marked the cycle top. BTC dropped 77% to $15,500.
Buying at greed: -77% drawdownLuna/3AC Collapse — Index at 6 (Extreme Fear)
Crypto market in panic after Luna collapse and Three Arrows Capital bankruptcy. Index hit 6. BTC was at ~$20,000.
Near generational bottom for many assetsFrequently Asked Questions
What is a good Fear and Greed Index score to buy?
Historically, buying when the Crypto Fear & Greed Index is below 20 (Extreme Fear) has produced the best long-term returns. The best buying opportunities came at single-digit readings (COVID crash in 2020 at index 8, FTX collapse in 2022 at index 6). However, don't go all-in at once — scale in gradually as fear increases.
How often is the Fear and Greed Index updated?
The Crypto Fear & Greed Index is updated daily at 00:00 UTC. Some providers offer intraday updates, but the daily reading is the most widely referenced. For the best signal quality, look at the index trend over 7-14 days rather than a single daily reading.
Is the Fear and Greed Index reliable?
The index is a useful sentiment gauge, not a crystal ball. It correctly identified major market tops and bottoms historically (2020 COVID crash, 2021 cycle top, 2022 bear market bottom). However, it can stay in extreme zones for weeks, making timing difficult. Use it as one input among many, not as a standalone trading signal.
What is the difference between crypto and stock Fear and Greed Index?
The stock market Fear & Greed Index (by CNN) uses different inputs: put/call ratio, market momentum, safe-haven demand, junk bond demand, VIX, and stock price breadth. The crypto version focuses on volatility, volume, social media sentiment, BTC dominance, and Google Trends. Both measure the same concept but for different asset classes.
Can the Fear and Greed Index predict crashes?
The index doesn't predict crashes directly, but extended periods of Extreme Greed (80+) have historically preceded significant corrections. When the index stays above 80 for 2+ weeks while price makes new highs with declining volume, the risk of a correction is elevated. It's a risk indicator, not a timing tool.
Test Your Knowledge
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What reading indicates "extreme fear" on the Crypto Fear & Greed Index?