Crypto traders who want to gain insight into the market’s psychology use the technical analysis tool.
According to the Crypto Fear & Greed Index, the cryptocurrency market is experiencing investor fear, with a three-month low score of 27 out of 100.
The seasoned technical analysis tool informs cryptocurrency traders worldwide on the current emotional sentiment and bias of the market by using the leading cryptocurrency asset Bitcoin (BTC) as the markets representative.
This information can then be used in conjunction with other analytical strategies to predict the likelihood of a future surge or correction, as well as whether current price levels represent a good time to buy or sell the market.
A lower number indicates a shift toward extreme market fear, implying that BTC is undervalued, whereas a higher number indicates extreme market greed, implying that prices are inflated above true value, implying a future decline.
The index now has a score of 27 following Bitcoin’s 10.4 percent drop to $43,313 this week. It was almost three months ago today, on July 26th, that it printed a figure at or below this level.
With a score of 10, the index hit a 1-year low on July 21st, followed by a parabolic rally to 5-month highs of 79 in late August and early September. The entire cryptocurrency market has experienced similar volatility, with prices frequently printing double digits.
Traders should “buy the fear, sell the greed,” according to Reddit user u/ DEDSEC_, who adapted the common trading mantra “buy the rumour, sell the news.”