The latest alternative data indicates that the current cryptocurrency Fear and Greed Index stands at 74, marking an increase from 72 the previous day. This consistent trend of 'Greed' in market sentiment has now persisted for 12 consecutive days. The Fear and Greed Index, a significant indicator used by traders and investors to gauge market emotions, averaged 73 over the past week, while the average for the preceding month was notably lower at 61. This index operates on a scale ranging from 0 to 100, providing insights into the psychological state of the market.
It integrates various key indicators that contribute to its calculation: volatility accounts for 25%, trading volume from the market also represents 25%, followed by social media activity at 15%, market surveys at another 15%, Bitcoin's dominance in the market contributing 10%, and finally, Google Trends data which makes up the remaining 10%.
Such a comprehensive approach allows traders to make informed decisions based on collective market sentiment, showcasing the significance of behavioral economics within the realm of cryptocurrency. As the index stays firmly in the 'Greed' territory, investors may look for signs of potential market corrections while navigating the speculative waters of digital assets..