Alternative.me represents the Bitcoin Fear and Greed Index. When there is extreme
fear, the investors are too worried and it may lead to a buying opportunity. When
the investors are too greedy, it may lead to a huge number of investors selling off
their Bitcoins.
The above image represents the Bitcoin Fear & Greed Index of 1 year. In the
image, when the index value is below 20, it represents extreme fear. And when the
index value is more than 60, it represents extreme greed.
As per the graph, the index value was below 20 from 9 March 2020 to 24 April
2020. During the same time, the Bitcoin price also fell from $9,087 on March 5 to
$4,650 on March 16. So, this represents extreme fear.
Also, on 11 August 2020, the Bitcoins Fear and Greed Index was at a value of 84,
that represents the extreme greed. During this time, the Bitcoin price was high at
$11,839, it means that this was the time when the traders could sell off their
Bitcoins
- Advantages of Bitcoin Fear & Greed Index
• One of the main advantages of the Bitcoin Fear & Greed Index is that helps
to analyze the volatile market which would otherwise be immeasurable.
• Crypto traders should regularly analyze the status of the cryptocurrency
market to know whether it is oversold or overbought.
• Gold, silver, oil, and other commodities also use such indicators. So, it is
possible to correlate the crypto market and these finite resources market.
- Disadvantages of Bitcoin Fear & Greed Index
Bitcoin Fear & Greed Index does not represent a single truth. It compiles the
available data into a metric that will make sense of data at a certain point in time.
For example, Fear may not correspond to a great time to buy. Similarly, greedy
does not mean that investors should sell.
This type of index is hard for common people to understand. There are many types
of fears, so it is hard for laymen to make sense of a fear and greed index. So, the
investors should thoroughly understand the index from both the ends of a
spectrum, whether it is overbought or oversold.
Final Word
With the help of the Bitcoin Fear & Greed Index, investors can understand the
sentiment of the market and the possible market trends. The traders and market
analysts use such indexes to come up with hypotheses about where the prices
might go based on the market’s sentiment.
Thanking you !
Regards :- Alternative.me
Cryptovip.
