Crypto Fear & Greed Index 2023: Live Crypto Sentiment

  • February 7, 2023
  • 7 Min Read

Markets move on news, data, and fundamentals but also on emotion. Various iterations of fear and greed indexes exist, pinning the dial to one side or the other, or drifting somewhere in between. We take a deep dive into the numbers and methodology.

Milk Road Fear and Greed Index for February 8, 2023

Extreme
Fear
Milk Man Greed
58
Extreme
Greed

The Milk Road Fear and Greed Index dropped to 54 forFebruary 8, 2023, down 2 points from yesterday. Crypto prices are trading up in the last 24 hours, with Bitcoin up 1% and Ethereum up more than 1.5%.

Key headlines driving market sentiment today:

What is a Fear and Greed Index in Crypto?

The fear and greed index is a single metascore that reflects the emotional sentiment of the market. The index moves between “Fear” and “Greed” depending on how traders are feeling at a particular moment in time.

Alternative.me, the biggest crypto fear and greed index, says its index is determined by “analyzing emotions and sentiments from different sources and crunching them into one simple number: The Fear & Greed Index”. This index goes from 0 to 100, with lower numbers indicating more fear in the market and higher numbers indicating more greed.

While many other indices take into account the technical factors of cryptocurrency trading — such as volatility and candlestick movements — the fear and greed index is all about psychology.

Even if crypto assets are fundamentally sound, the market may be in a frenzied fire sale or a gleeful buying spree simply due to the future price expectations of traders.

The fear and greed index reflects these sentiments and serves as a useful guide in helping you determine when there may be good opportunities to buy or sell.

The fear and greed index doesn’t depend on the price of crypto. Rather, it is a measure of the direction the market is going in and how much emotion is driving trading decisions.

There are moments of extreme greed and extreme fear (and everything in between) at all price levels of crypto. The fear and greed index is more about price trends rather than absolute prices.

Fear

Index figures below 50 indicate varying levels of fear — the closer the index is to 0, the more fear the market is experiencing. During times of fear, traders are selling off their crypto quickly and are less sensitive to low prices. This is often because traders are being liquidated or they are selling as quickly as possible to limit losses.

Remember, the index does not reflect the price of crypto itself, so significant fear does not necessarily mean that the prices of crypto are low. Rather, it just means that traders are panicking and hastily selling. Because of this, fearful markets can be good buying opportunities.

Greed

Index figures above 50 indicate varying levels of greed. Greedy markets mean that traders are optimistic about the future price and are buying in droves.

Greed does not have to be tied to the price of crypto itself. Rather, it can arise in any market and just depends on the emotional sentiment of traders at a particular point in time. Greed should be regarded with caution and may signal a good time to sell.

How are They Calculated?

The original fear and greed index was developed for the traditional stock market by CNN Money. The same basic idea has been applied by various websites for the crypto markets.

The alternative.me fear and greed index tracks the market sentiment around Bitcoin. The majority of the crypto market is correlated with the main coins like Bitcoin and Ethereum, so this index is often a good proxy for the crypto market as a whole. The alternative.me index is calculated using a number of factors that each contribute a different amount to the overall index. These factors are:

  • Volatility (25%): Volatility is a traditional market indicator that exists separately from fear and greed indices. Normally, volatility is the measure of how much the price of a cryptocurrency moves during a period of time. Times of high uncertainty see high market volatility, while times of relative stability see lower volatility. The fear and greed index compares volatility over a 30- and 90-day period and considers “unusual rises in volatility as a sign of a fearful market”.
  • Market momentum/volume (25%): Crypto markets experience different buying and selling volumes each day. Some days are relatively quiet while other days see a frenzy of trading activity (high volume). The fear and greed index treats periods of high buying volume as indicative of greedy sentiments and periods of high selling volume as indicative of fear.
  • Social media (15%): The fear and greed index uses social media crawlers to monitor hashtags and other activity for indications of trader sentiment. The most popular websites for this sort of analysis are Twitter and Reddit. The algorithms watch posts about crypto and monitor how many interactions they receive. An unusually high interaction rate indicates greedy sentiment.
  • Surveys (15%): alternative.me hosts a polling website that puts out weekly polls asking traders how they view the crypto markets. According to the website, their weekly polls get “2,000 to 3,000 votes on each poll” which help to directly understand trader sentiment.
  • Dominance (10%): This aspect is specific to the fact that the alternative.me fear and greed index is reflective of Bitcoin. The “dominance” factor is a measure of how much of the total crypto market market cap consists of Bitcoin (thus measuring Bitcoin dominance). The thinking is that, since Bitcoin is traditionally seen as the most safe cryptocurrency, a higher Bitcoin dominance indicates market fear, while a lower Bitcoin dominance indicates market greed.
  • Trends (10%): Analyzing Google Trends data for various queries helps to inform the fear and greed index. An increased search volume for queries with a negative connotation, such as “bitcoin price manipulation” indicates fear, while an increase in search volume for positive connotations indicates greed.

Other Crypto Fear and Greed Indices to Watch

Index nameIndex is CalculatedSentiment is Gathered FromBTC Price Chart OverlayStandout FeatureWebsite Embed Functionality
Alternative.me IndexEvery 12 hoursVolatility, Market Momentum/Volume, Social Media Surveys, Dominance, TrendsNoFirst of its kind fear and greed index for cryptoYes
Look Into Bitcoin IndexOnce a dayVolatility, Market Momentum/Volume, Social Media, Dominance, TrendsYesInteractive chart with fear and greed overlaid onto BTC priceYes
BTCtools.io IndexEvery 8 hoursVolume, Open Interest, Social Media, Search TrendsYesColor-coded graph with BTC price overlayNo
Alpha Data Analytics IndexEvery hourAI platform that reads news outlets and social media platformsYesUnique sentiment indicators: awareness, momentum, overbought, and oversoldNo
CoinStats IndexEvery 12 hoursVolatility, Market Momentum/Volume, Social Media, Surveys, Dominance, TrendsYesA BTC dominance percentage indicatorNo
Bitcoin Fear and Greed Twitter IndexSeveral times a dayVolatility, Market Momentum/Volume, Social Media, Surveys, Dominance, TrendsNoTwitter-based fear and greed indicatorYes (by embedding tweets)

1. Alternative.me Index

Alternative.me fear greed index

The alternative.me index was the first fear and greed index for crypto. The index uses the price of Bitcoin to determine investor sentiment and displays a metascore in a tachometer-style gauge. The index also keeps track of investor sentiment over time and displays a graph of sentiment values for previous days. The alternative.me index updates twice every day.

Alternative.me index highlights:

  • Was the first fear and greed index for crypto
  • Uses a six-point data system to determine sentiment that includes volatility, market momentum/volume, social media, surveys, dominance, and trends
  • Features an easy-to-install iOS widget
  • Website shows a chart of the fear and greed index’s historical values over time

2. Look Into Bitcoin Index

Look into Bitcoin fear and greed index

The website lookintobitcoin.com features a fear and greed index that’s based on the price of Bitcoin. An innovative feature that this index has compared to others is an interactive overlay of the current and historical fear and greed values over a Bitcoin price chart. This chart updates every day and allows users to zoom in by clicking and dragging in order to view the historical trend on smaller timelines.

Look Into Bitcoin index highlights:

  • Features a fear and greed index, as well as a historical price chart with fear and greed values overlaid
  • The index derives its sentiment from a number of factors including BTC volatility, momentum and volume, social media mentions, dominance, and Google Trends data
  • Easy-embedding widget code that can be used to embed the index to your own website

3. BTCtools.io Index

BTCtools.io fear and greed index

The fear and greed index from BTCtools.io measures investor sentiment and maps fear and greed numbers on a historical trends graph. The graph is color-coded for easier readability and features one-month, three-month, one-year, and “all” timescales.

This index departs from others in that it uses only four factors to determine its metascore. These are: volume (how the current market volume compares to historical volume), open interest (the amount of open positions on crypto exchanges), social media sentiment through Twitter and Reddit, and search trends through Google and Bing.

BTCtools.io index highlights:

  • Updates every eight hours, or three times as often as an index that only updates once a day
  • Color-coded fear and greed time chart
  • A diverse set of sentiment factors that includes the “open interest” consideration which not many other fear and greed indices use

4. Alpha Data Analytics Index

Alpha Data Analytics fear and greed index

While most indices feature only a “sentiment” gauge, Alpha Data Analytics’s fear and greed index features that as well as an “awareness” measure. The platform also combines several sentiment factors together to come up with a “momentum” measure. These unique tools can give traders an edge when using the Alpha Data Analytics index versus others.

The “awareness” indicator is a measure of how much crypto is in the public eye at any given point in time. A high awareness factor means that multiple news outlets are running crypto stories and that some headline-worthy action is underway. The “momentum” indicator is calculated by “combining the strengths of the awareness and sentiment indicators” and can be interpreted as a measure of attention growth.

Alpha Data Analytics index highlights:

  • Sentiment tracking using a proprietary AI that covers “350 largest news outlets and social platforms in 17 languages, reading 70 news related to the crypto topic every minute”
  • Updates every hour
  • Awareness factor that reflects crypto’s presence in the news media at different points in time
  • Three additional indicators to help traders make decisions: momentum, overbought, and oversold

5. CoinStats Index

CoinStats fear and greed index

The CoinStats fear and greed index shows a single metascore, similar to other indices, but also features some additional indicators that are not found on other websites such as a BTC dominance indicator, a fear and greed index chart overlaid with the prices of several different crypto assets, and market cap/24h volume figures. The metascore is calculated using volatility, market momentum, social media sentiment, surveys, Bitcoin dominance, and Google Trends data.

CoinStats index highlights:

  • Features a BTC Dominance percentage score which shows how much of the crypto market cap consists of just BTC
  • Updated every 12 hours, which is more often than many other indices, which only update once a day
  • CoinStats website allows you to overlay the price graphs of different assets over the fear and greed index values; these assets are BTC, ETH, USDT, and USDC

6. Honorable Mention: Bitcoin Fear and Greed Twitter Index

Bitcoin fear and greed Twitter index

Traditional fear and greed websites are useful for doing an in-depth analysis on market sentiment, but sometimes you want a quick update on fear and greed as you go about your day. Enter the Bitcoin Fear and Greed Index Twitter account. The account sources its data from the alternative.me index, so this is not a different index, but simply a different medium for receiving the same data.

Bitcoin Fear and Greed Index Twitter account highlights:

  • Quick and easy Twitter profile that posts fear and greed updates several times a day
  • Uses the alternative.me index to source its data
  • Each post features lively Twitter discussion about the latest fear and greed numbers — a social feature you don’t get anywhere else

How Do You Read a Fear and Greed Index?

The fear and greed index combines a number of traditional market indicators such as volatility, volume, trends, and more into a single score that summarizes the mood of the market. Markets go through periods of irrational exuberance and valleys of exaggerated sorrows. Being able to see through these periods of emotional trading can be a winning trading strategy.

Putting a fear and greed index side by side with a price chart uncovers some interesting patterns — periods of high fear almost always precede a price reversal, while periods of high greed almost always precede a coming price crash.

Fear and greed index price chart

At its core, the fear and greed index is meant to alert traders that price reversals may be coming and to inform them when to buy or sell.

How Do You Use a Fear and Greed Index?

The quote from famed investor Warren Buffet applies most aptly to the fear and greed index: “Be fearful when others are greedy. Be greedy when others are fearful.”

Much of profitable investing comes from taking advantage of market opportunities such as buying the dip (buying when prices are at their lowest) and calling the top (selling when prices are at their highest). The fear and greed index is a great way to monitor the sentiments of other investors and position yourself to make trades that are counter to the market’s mood — thus buying when the market is in a panic sale, and selling when the market is irrationally exuberant.

Keep an eye on the fear and greed figures. Anytime there is extreme fear in the market, this might be a good opportunity to buy. Alternatively, as the market ticks up closer and closer to extreme greed, you may want to start selling since a price crash is most likely near.

To Sum it Up

The fear and greed index measures the mood of the crypto market. Significant fear indicates turbulent markets and signals higher prices in the future, while significant greed signals coming price crashes.

Frequently Asked Questions

  • Where do I find a fear and greed index for crypto?

    Expand to learn more

    The most popular fear and greed index is from the website alternative.me and can be viewed here.

    A more comprehensive price index that includes more data points can be found here.

  • How often is a fear and greed index calculated?

    Expand to learn more

    Most fear and greed indices are calculated once or twice a day with some more advanced ones calculated every hour.

Contributors

  • Avatar of George Hristov

    George is a tech writer interested in web3 startups and communities. In the dynamic world of crypto, he stays plugged in to the day-to-day headlines, deep dives, and industry commentary.

  • Avatar of Gary Anglebrandt

    Gary Anglebrandt is a US-based editor, copywriter, and communications consultant with a background in business and international news. Beyond the US, he has worked from Seoul and Beijing, and continues to work with professionals based around the globe.