Contents
What the index is based on the sentiment of the Bitcoin?
The behavior of the market, crypto is very emotional. People tend to be greedy when the market is bullish, resulting in FOMO (fear of lost). In addition, people often sell their coins so irrational when you see red numbers. With the index of fear and greed, of alternative.to me, you can have an idea about the sentiment of the Bitcoin. The extreme fear can be a signal that investors are too worried. This could be a buying opportunity. When investors become too greedy, that means that the market should be corrected. In summary, the sentiment of the current market of Bitcoin is classified with a simple gauge from 0 to 100. Zero means “extreme fear” while 100 means “greed extreme”. The value is updated every day automatically at 04:00 GMT
What is composite index?
According to alternative.I the index is composed as follows: Volatility (25%), Time / Volume of the Market (25%), Social Networks (15%), Surveys (15%), Dominance (10%) and Trends (10). Volatility: Measures the current volatility and the maximum. Reduces the Bitcoin and compares it with the average values of the past 30 days and 90 days. An unusual spike in volatility is a sign of a market fearful. Time / Market Volume: in Addition, measure the current volume and the momentum of the market (again in comparison with the past values of average 30/90 days), and bind those two values. In general, when we see high volumes of purchase in a market positive daily, we conclude that the market is acting too greedy / too optimistic. Social media: Analyzing Twitter posts. Have publications in several hashtags for each currency (publicly, showing only those of Bitcoin). A rate of interaction high unusual results in growing public interest in the currency, which corresponds to a behavior greedy in the market. Surveys: Together with strawpoll.com a platform for the public vote quite large, conduct surveys cryptographic weekly, asking people how they see the market. Generally, vote between 2,000 and 3,000 for each survey, obtaining an image of the market sentiment.
Components of minor relevance
Dominance: The dominance of a currency is similar to the share of market capitalization of the entire market of encryption. An increase in the domain of Bitcoin is caused by the fear of the investment of alternative currencies too speculative, since Bitcoin is becoming more and more in the safe shelter of the cryptocurrencies. On the other hand, when the domain of Bitcoin is reduced, people become more greedy by investing in alternative currencies more risky, dreaming of their chance on the next big running of the bulls. Trends: extracted data from Google Trends for various search queries related to Bitcoin and analyze those numbers, especially the change of the volumes of search. From CriptoTendencia we have observed that increasingly the more investors will pay attention to this index, so that give you a glimpse of daily is not others, especially if you are a trader in the short term. The following two tabs change content below. This content has been prepared from our writing.