Crypto Fear and Greed Index

Based on the analysis of emotional changes for Bitcoin and other cryptocurrencies, an indicator called the Crypto Fear and Greed Index has been developed.

In this index, which can be measured between 0 and 100, a value of 0 means "Extreme Fear" and a value of 100 represents the state of "Extreme Greed". According to this system, which emphasizes that the emotional orientation of investors has a high effect on the crypto money markets, people tend to be greedy when the market is rising. This state of greed causes FOMO (Fear of Missing Out), and with this fear, purchases rise. Also, when people often see red bearish levels, they tend to sell because of the irrational reaction of red.

The Crypto Fear and Greed Index has two simple assumptions: Extreme fear can be a sign that investors are very worried and there is a buying opportunity.When investors become too greedy, it means that the market needs to make a correction. With these inferences, an index between the numbers 0-100 was created and the current sensitivity of the Bitcoin market was tried to be analyzed with this index. 100 indicates extreme greed and 0 indicates extreme fear.

Crypto Fear and Greed Index Data Sources

Data is collected from six different sources while determining the Crypto Fear and Greed Index. Each data point is worth the same as the previous day to visualize meaningful progress in the emotional shift in the crypto market.

The current volatility and maximum levels of Bitcoin are measured. These metrics are compared with values ​​corresponding to the last 30 and 90 days. An unusual increase in volatility indicates a state of fear in the market.

Market Cap (25%)

Likewise, the current market volume and momentum are measured by comparing them with the average values ​​of the last 30 and 90 days. Generally, if the market sees high buying volumes above daily values, this leads to the conclusion that the market will rise to a state of extreme greed.

Social Media (15%)

Social media plays an important role in crypto markets. Especially on Twitter, texts from various hashtags are collected and analyzed for each coin. However, only those written for Bitcoin are displayed and evaluated publicly. It is checked how fast and how much interaction these hashtags get in certain time periods. An unusually high engagement rate corresponds to a greedy market behavior.

Surveys (15%)

Survey data is currently paused. Prior to the pause, weekly cryptocurrency surveys were conducted asking respondents how they viewed the market. Generally, 2000-3000 poll votes were used and an analysis was made on the results of these votes. However, while these results were useful at the beginning of the study, they are not considered very remarkable at the moment.

Domination (10%)

The increase in Bitcoin dominance is thought to be due to the fear of altcoin investments, which are very speculative. On the other hand, when Bitcoin dominance wanes, people become more greedy by investing in riskier cryptos and dream of their chances in the next bull run. As a result, this can lead to greedy behavior as interest in a crypto other than Bitcoin increases.

Trends (10%)

Google Trends data is used to reach search results related to Bitcoin. If the word "Bitcoin" is searched on Google, not much information can be found about the emotional orientation, but currently, as of October 2020, the relevant search box will be "Bitcoin "Will it be $12,000?" If current inquiries such as these are made, this can give information that the market will become greedy.