Fear and Greed Index
Also called: crypto fear and greed index · fear & greed index
Definition
The Fear and Greed Index is a sentiment gauge that combines market data such as volatility, momentum and social activity into a single score from 0 (extreme fear) to 100 (extreme greed).
This entry is shown in English.
How Fear and Greed Index works
Crypto versions of the index, such as the widely followed one from Alternative.me, blend several inputs: recent volatility, trading volume and momentum, social media activity, bitcoin dominance and search trends. Each provider weights them differently, so two indexes can show different scores on the same day.
The score is usually grouped into bands: extreme fear, fear, neutral, greed and extreme greed. Many traders read it contrarian-style: extreme fear can appear near capitulation lows, and extreme greed can appear when the market is overheated and crowded with leveraged longs.
Treat it as a mood thermometer, not a timing tool. Markets can stay in extreme greed for weeks during strong uptrends, and fear can deepen for a long time in bear markets. It is most useful when combined with things you can measure directly, such as funding rates, open interest and your own position size.
Example
Suppose the index reads 85, extreme greed, while funding rates on major perpetual contracts have stayed positive for two weeks. You hold 1 BTC and planned to add another 0.5 BTC with 5x leverage. Instead of adding at peak sentiment, you keep the 1 BTC and plan to buy the extra 0.5 BTC without leverage, in five spot orders of 0.1 BTC at lower levels. If the market keeps rising, you still hold your original 1 BTC; if it pulls back 15%, you avoid a leveraged position that would have lost about 75% of its margin.
Common mistakes
- Buying or selling the moment the index hits an extreme, as if it were a precise signal.
- Assuming all fear and greed indexes use the same formula.
- Ignoring that the index is mostly built for bitcoin and may not reflect a specific altcoin.
Learn and practise
FAQ
Is extreme fear a good time to buy crypto?
Some traders use extreme fear as a contrarian hint, but prices can keep falling while fear persists. It describes mood, not where the bottom is.
How often is the Fear and Greed Index updated?
Most crypto versions update once a day. Check the provider's page for its exact schedule and inputs.