Indicator of market sentiment Fear & Greed Index service alternative.me currently indicates increasing anxiety among investors of the cryptocurrency.
The following graph you can see that if in mid-February and early may, investors were more or less optimistic, but now the panic has increased significantly:
Note also that between the price of bitcoin and indicators of the index are fairly close correlation. So, with the growth of market capitalization of crypto-currencies the index value usually indicates “greed”. On the other hand, the more reduced the price of bitcoin and other cryptocurrencies, the more the index indicates “fear”.
According to the creators of the index, the indicator value is ‘Extreme fear’ (“Extreme fear”) is a good buy signal. Conversely, when the indicator shows “Greed”, it says overheated market and a high probability of correction.
According to the developers, the Fear & Greed Index takes into account the following data:
- current and the average value of the volatility of bitcoin (the more volatile prices are, the stronger the panic on the market);
- the trading volume of the cryptocurrency;
- keywords and hashtags in social networks;
- survey data;
- the index of dominance of bitcoin;
- Google Trends.
ForkLog previously reported that Thomson Reuters intends to make use of artificial intelligence to monitoring sentiment in the cryptocurrency market.