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Crypto Fear and Greed index or How Not to Follow the Dumb Money

Guru Warren Buffett once said:

Be fearful when others are greedy, and greedy when others are fearful.

Aha, but that’s easier said than done for most of the people. We are emotional, like a Mexican telenovela, run by Fear & Greed way more than we would like to.

Where were you in the previous crypto bear markets?  Likely sitting on the curbside saying, “meh, Bitcoin… ” Then fast forward 1.5 years later, you bought various crypto coins blinded by greed as they went up 1000% only because of FOMO . You paid 11$ instead of 1$ for the “Banana Coin” , and it was a euphoric moment. To the moon you said this will be worth way more. Sounds familiar ?

Crypto DCA meme

Say hello to Crypto Fear & Greed Index which looks at various factors and tracks how the general market feels about Bitcoin AKA Big Daddy. 

Live Crypto Fear & Greed Index Here

Crypto Fear And Greed Index

As you may already know, Altcoins follow Big Daddy wherever he goes, so following Bitcoin works well.

Why? Why to Track that?

Different emotional states can have unpredictable effects on decision-making at different times.

Crypto Fear and Greed example

Fear and Greed Index saves you from your own emotional overreactions

Excitement can cause you to overestimate your chances of success.  Fear can cause you to sell your Rolex for a couple pennies. Hangriness can cause you to cut a stranger.  Well, you get the gist. Fear And Greed index saves you from your own emotional overreactions. Maybe your one single article you read today about “Bitcoin going to zero” has created a bit of overreaction.  Just maybe?

HODL meme

Be Fearful when others are greedy, and greedy when others are fearful.

Historians who have examined the dinosaurs & behaviour of financial markets over a long period of time have challenged the assumption of rationality that underlies efficient market theory.  The main reason behind this irrationality is human emotions.

Excessive fear can lead to crypto becoming oversold or undervalued – Buy indicator

During fear periods, which shall pass at some point,  investors like you and me, may want to build up their position in crypto assets with good fundamentals at lower costs.  What really matters at this stage is fundamentals of the crypto or company you are buying into. Remember, poor fundamentals during a long period of fear and your project can burn into the ground, in other words your “Banana Coin” will become worthless.

crypto fear

Now, on other hand excessive greed can lead to crypto becoming overbought or overvalued – Sell indicator. I repeat: This is a Sell indicator and not a Buy indicator.

FOMO buy crypto

During extreme greed, fundamentals do not matter, valuations become meaningless, trends climb to the sky and it seems like the “Banana Coin” investors will soon be buying Lambos.  Ladies and Gentlemen, that is FOMO and sooner or later this shall pass too..

In the 1930s, economist John Maynard Keynes said:

Markets can stay irrational longer than you can stay solvent.

Unfortunately, that bit of wisdom remains true today. So, keep this in mind. 

Crypto fear ang greed index explained

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