HomeCryptoFear and Greed Index: crypto market sentiment analysis

Fear and Greed Index: crypto market sentiment analysis

In this article we will analyze the current crypto market sentiment using the Fear and Greed Index and looking at the most popular opinions from the community on Twitter.

Is there fear or greed following the SEC’s heavy-handed intervention on the crypto industry?

We see it below.

Analysis of the crypto Fear and Greed Index

The Fear and Greed index is one of the most widely used indicators in the crypto industry to determine whether there is panic or optimism among investors, using a scale of 1 to 100.

Following the recent SEC lawsuits filed against Binance and Coinbase, the market has responded negatively at the speculative level, but without showing brutality in price corrections, at least as far as Bitcoin and Ethereum are concerned.

On the altcoin front, the dump has been more pronounced, but in recent hours partial recoveries of the lost percentage points are beginning to be made, leaving the situation still in the balance.

A continuation of the SEC’s crackdown on crypto in the US and the backing of the federal courts could give the finishing blow to many tokens in the alt sector, which are in danger of no longer being able to be traded on US soil.

In fact, the federal regulator has declared many cryptocurrencies that are listed on the Binance and Coinbase marketplaces to be securities, hinting to all exchanges that they could be punished if they do not stop offering such cryptocurrencies to US investors

In the midst of this stormy environment, the fear and greed index shows a market sentiment situation somewhere between fear and greed, marking a value of 47.

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The index signals to us a decline in investor positivity from previous weeks when Bitcoin was on the verge of breaking the $30,000 mark.

At the same time, there is more confidence among traders compared to the values recorded in Q4 2022, when the market was at the lows of its bearish cycle and Bitcoin had touched $15,000.

Usually when the fear and greed index marks a value below 25, thus of widespread fear in the market, this could translate into a good-priced buying opportunity.

On the other hand, when the index is above 75, it could be a good opportunity to unload one’s positions because of too much widespread optimism in the markets.

However, be careful to take these assumptions with a grain of salt: it is necessary to compare the indicator with other analytical tools in order to draw conclusions.

In itself, the fear and greed index could in fact fluctuate between fear values for months without actually triggering a rise in prices

We saw this specifically in May 2022 when the index showed one of its lowest values ever recorded and Bitcoin continued to dump until July before seeing an actual recovery.

At the moment the current value of 47 tells us that crypto analysts are undecided about the near-term future of the industry.

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Crypto market sentiment on Twitter: fear or greed?

The fear and greed index is very helpful in tracking sentiment in the cryptocurrency market but it is not exhaustive and should not be analyzed individually.

The index, to give a benchmark on a scale of 1 to 100, uses the parameters of volatility, volumes, Bitcoin dominance, social media engagement, and Google Trend data.

If we take these data one by one, we can get a better idea of the overall market situation.

In particular, by poking through the tweets of the most influential profiles on the social media site Twitter, we can get some more information about what the cryptocurrency community thinks.

Many believe that now is a good time to accumulate and that the coming months will be bullish for the entire sector.

The community seems to agree that the terror unleashed by the SEC is just a move engineered to generate distress among investors and manipulate the market.

With each bear market, terrible news is spread with impeccable timing against the market, signaling a bottom in prices.

In the 2018 bear market, the narrative that instilled fear in retail investors was the FUD concerning China’s ban on crypto.

We all know how things have turned out in the months/years since.

You have to be greedy when others are fearful, and vice versa.

Is the crypto bear market over?

According to what the crypto community says on Twitter the end of the bear market may be upon us, but in parallel the fear and greed index signals indecision among investors.

The fact of the matter is that by uniquely analyzing market sentiment one cannot draw reliable conclusions that can predict the next price trend.

In such a complex environment where macroeconomic conditions and geopolitical pressures become so intense in the crypto sector, the ideas of traders could change at any moment.

Those who are optimistic now could be scared off in a few weeks as well as the other way around.

What is most convenient to do right now is to wait and see future developments in terms of regulation in the US, waiting for a response from the federal courts following the SEC’s political propaganda.

Should security tokens be ousted from the dynamics of the US markets, the altcoin sector is likely to experience a bloodbath in price trends. 

Therefore, be careful in exposing yourself so aggressively to “alternative coins” by screaming “sales,” as the game has just begun.

Separate discussion for Bitcoin and Ethereum, which have remained outside the security token narrative enjoying a highly decentralized structure untouchable by any government institution.

Then again, it is clear that no country will ever be able to block the industry’s two top cryptocurrencies by, for example, calling Satoshi Nakamoto to the courtroom and banning Bitcoin mining globally.

Block production and transaction processing will always work for these two networks, and there is nothing that can hinder their future.

For this reason, BTC and ETH holders right now are thanking Gary Gensler for allowing them to lower average load prices by increasing the share of satoshis and gwei in their non-custodial wallets.

Alessandro Adami
Alessandro Adami
Graduated in "Information, Media and Advertising", for over 4 years interested in the cryptocurrency and blockchain space. Co-Founder of Tokenparty, community active in spreading crypto-enthusiasm. Co-founder of Legal Hackers Civitanova marche. Information technology consultant. Ethereum Fan Boy and supporter of Chainlink oracles, strongly believes that smart contracts will be central in the development of society.