Panic gripped the markets on Wednesday morning, when Bitcoin once again approached the $20,000 mark.
The Bitcoin Fear & Greed Index hit an all-time low on Wednesday. The index showed the number “7” – synonymous with extreme fear in the markets.
The index in question is freely accessible on the web. It is intended to be representative of general investor sentiment. Traders regularly use this indicator to gauge the chances of a trend change.
The Fear & Greed indicator is calculated based on price will, trading volumes, social media keyword analysis, trends on Google Trends, and general bitcoin dominance. This is of course a theoretical indicator, which nevertheless allows to get an idea of the general feeling.
“The cryptocurrency market is very emotional. People tend to be greedy when the market goes up and sell their assets irrationally when it goes down sharply. explains the site. A state of extreme fear is thus intended to be representative of investor concern and is generally equated with a good buying opportunity. Conversely, a high index suggests a market correction.
The Fear & Greed index ranges from 0 to 100. In a bull market, the index tends to climb above 80. When prices crash, it can regularly fall below 20. It is however quite rare that the index falls below the threshold of 10. Since its implementation, it has also fallen only once below 8, in August 2019.
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