He Fear and Greed Index —What meaning in Spanish is “fear and greed” – it is an indicator that measures the feeling of the market, analyzing factors such as volatility, demand for safe assets and the price of financial assets.
In the case of Bitcóinthis index is especially relevant, since its price is highly volatile and is usually influenced by the feeling of investors.
Juan Fonseca, Vice President of Osmoexplains that currently Bitcóin (BTC) It is in an upward phase of its price cycle. Historically, in these periods corrections of between 20% and 50% are produced. The recent 25% drop from the historical maximum of US $ 109 thousandreached in January of this year, is considered moderate within this context.
It is important to mention that, unlike other cryptocurrencies, Bitcóin has shown a predominant upward trend, despite its low moments. In 2011, its price began in US $ 8reached its historical maximum of US $ 109 thousand on January 20, 2025 and, subsequently, descended to US $ 82 thousand 772 to February 27, compared to its last peak.
This correction is aligned with the analysis of the Fear and Greed Indexwhich reflects how market psychology influences the supply and demand of assets. This indicator was initially developed by CNN Money For the traditional market, but in 2018, Alternative.me created an adapted version for the cryptocurrency sector.
In both cases, its objective is to measure the feeling of markets through a multiple analysis that allows quantifying the emotions that drive the decisions of investors.
This index is updated daily and offers a real -time result. The metrics that analyze are:
- Volatility: It is obtained by analyzing the volatile peaks of the averages of the last 30 and 90 days.
- Market impulse: Compare the volume and momentum of operations according to the averages of the last 30 and 90 days.
- Feeling in social networks: Analyze the posts and hashtags related to Bitcóin.
- Bitcóin domain: Compare the dominance of BTC With others cryptocurrencies.
- Volume of operations.
- Google Trends data: Analyze the search terms related to BTC.
Bitcóin It is a highly volatile asset, but many consider it low risk. Although its price may experience significant fluctuations, history has shown that its long -term trend is clearly bullish.
Fonseca explains that, according to his experience, “despite suffering substantial falls, he has always managed to recover and reach new maximums”
What measures the fear and greed index?
He Fear and Greed Index It is an indicator that measures the feeling of the market, helping to determine whether investors act with fear or greed in their financial decisions.
- Evaluate the emotional state of the market.
- Identify whether investors are too optimistic or pessimistic.
- It measures the fear and greed of investors in the stock market.
How does the fear and greed index work?
He Fear and Greed Index It works through a scale from 0 to 100, where the lowest values reflect fear in the market and the highest indicate a feeling of greed among investors.
The algorithm processes this data through its own calculations, normalizing each component on a scale of 0 to 100.
These weighted scores later merger in the final value of the Fear and Greed Indexwhich is updated daily at 00:00 UTC (18:00 H Guatemala).
The levels are:
- 51-74: Moderate greed.
- 75-100: Extreme greed.
What is it for?
- Help investors identify the best moments to buy or sell.
- Promotes commercial activity in the stock market.
- Help the bags determine when to launch certain products.
How to use the index of fear and greed?
This index can be considered more than a statistical data, a psychological manipulation.
Fear can trigger panic sales During recessions, while greed feeds the fear of missing purchases during the increases.
Fonseca explains that this is an indicator that describes the state of the market and, many times, only reflects the feeling that we all have intuitively. “If there is a lot of volatility, if there are expectations of a price drop, if Bitcóin It is oversized, the score is low, indicating that there is fear. ”
When the market is optimistic, the trend is upward and there is good news, then the index is positive and it is said that there are avarice.
“I do not recommend using it [el índice de miedo y codicia] As an indicator to buy or sell, since the price can always fall more or climb more independently than what the index says, “explains Juan Fonseca.
Recommends that “the best strategy in Bitcóin and in markets in general it is to buy based on fundamentals and sustain positions for the long term. In the case of BTCa minimum term of 5 years It is ideal. “
Why is it said that Bitcóin is a low risk asset?
The risk is generally associated with factors such as specific sectors, institutions, countries or management teams. Bitcóinon the other hand, it is a decentralized asset without a central fault point. It does not depend on any particular entity, which makes it resistant to corporate or regulatory crises.
Therefore, some of the world’s largest asset administrators, such as Blackrockthey recommend it as a tool to reduce the risk in an investment portfolio, since it is not tied to the uncertainty that affects traditional markets, explains Fonseca.
Another key aspect is that Bitcóin operates in a market 100 % freewithout schedules or restrictions. Unlike traditional stock markets, where there are mechanisms to stop volatility, in BTC There are no interruptions. This can amplify the impact of the investor’s psychology in the short term, especially before high -impact news. However, over time, the price tends to adjust to its equilibrium value.
Finally, the foundations of Bitcóin They are more solid than ever. More and more people, companies, institutions and even countries are accumulating BTC. Since it is a scarce asset, the growing unbalance between supply and demand generates an inevitable bullish pressure, which has historically led to new increases in its price.