What is the crypto Fear and Greed Index?

The crypto Fear and Greed Index is a sentiment gauge that turns several kinds of market data into one score between 0 and 100. A low reading signals fear among traders and a high reading signals greed. The fear and greed index crypto traders cite most often is published daily by the website Alternative.me, while CoinMarketCap runs a separate version with its own method.

How is the Fear and Greed Index for crypto calculated?

Alternative.me says its index is built from several weighted inputs, updated daily and currently based on bitcoin only:

• Volatility (25%). Current price swings and drawdowns, meaning drops from a recent high, compared with 30-day and 90-day averages. Unusually high volatility is read as fear.
• Momentum and volume (25%). Trading volume and momentum against recent averages. Heavy buying in a rising market is read as greed.
• Social media (15%). Bitcoin-related posts and engagement on Twitter, which the site analyzes by hashtag.
• Surveys (15%). Weekly polls, which the site says are currently paused.
• Dominance (10%). Bitcoin's share of total crypto market value. Alternative.me treats rising bitcoin dominance as a sign of fear, because money moves out of riskier altcoins.
• Trends (10%). Google search data for bitcoin-related terms.

The site's reasoning is that crypto traders are emotional. They tend to chase rising prices out of FOMO, the fear of missing out, and to sell in a panic when prices fall.

How does CoinMarketCap's version differ?

CoinMarketCap launched its own index on August 3, 2023, according to its announcement. It aims to cover the wider crypto market rather than bitcoin alone. Its five inputs are price momentum across the ten largest cryptocurrencies excluding stablecoins, implied volatility indices for bitcoin and ether, options put/call ratios, a stablecoin supply ratio, and CoinMarketCap's own search and user engagement data. Its chart page does not publish exact weights.

How is crypto fear and greed different from CNN's Fear and Greed Index?

CNN's index tracks the stock market, not crypto. According to SoFi, it averages seven equally weighted signals, including the S&P 500 against its 125-day moving average, stocks hitting 52-week highs and lows, options activity, junk bond demand, the VIX volatility index and demand for Treasury bonds as a safe haven. The two indexes share a name and a 0 to 100 scale, but they measure different markets with different data. They can point in opposite directions on the same day.

How should you read a Fear and Greed Index chart?

The current number and a fear and greed index chart of past readings are posted on both sites, so "fear and greed index today" searches lead there. The history shows how mood has shifted alongside prices.

The index has clear limits. It describes how traders feel, not what an asset is worth. It relies heavily on recent price action, so it often confirms a move rather than predicting one. Inputs and weights differ between providers, and some, such as Alternative.me's surveys, can be paused. CoinMarketCap itself says the index should not be used in isolation. Readers who want broader context can look at how bull and bear markets work and why crypto is so volatile.

Crypto prices are volatile and a token can lose most of its value.