Cryptocurrency Fear Index Drops to Critical Level! What Does It Mean? Here Are the Details
The Crypto Fear & Greed Index dropped to 15, indicating 'extreme fear' and potentially signaling market panic. The decline is attributed to Bitcoin price drops, lower trading volumes, and negative investor sentiment, compounded by rising US interest rates and macroeconomic uncertainties. The index measures investor sentiment based on six factors, including market volatility, trading volume, social media, and others. Experts suggest such extreme fear periods may signal market bottoms but anticipate continued volatility and selling pressure in the short term.
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Crypto Fear & Greed Index Hits Extreme Fear Levels
The Crypto Fear & Greed Index dropped to 15, falling from 24 the day before and entering the "extreme fear" territory. The weekly average score is recorded at 27. These levels suggest that the market is entering a state of “extreme panic.”
Understanding the Crypto Fear & Greed Index
The crypto fear index is a key market indicator that measures investor sentiment. The index's score ranges from 0 to 100, where values closer to 0 indicate extreme fear, and values closer to 100 indicate extreme greed.
Calculation of the Crypto Fear Index
The index is calculated based on six key factors:
- Market volatility (25% weight)
- Trading volume (25% weight)
- Social media interactions (15% weight)
- Investor surveys (15% weight)
- Bitcoin's market dominance (10% weight)
- Google search trends (10% weight)
Reasons for the Drop in Sentiment
Analysts attribute the sharp decline in the index to several factors:
- The decline in Bitcoin's price
- Falling trading volumes
- Negative investor sentiment on social media
Additionally, they highlight rising US interest rates and macroeconomic uncertainties, which have further weakened investor confidence.
Expert Opinions on Market Trends
According to experts, periods of “extreme fear” often signal market bottoms, providing potential buying opportunities. However, they also caution that high volatility and selling pressure are likely to persist in the short term.