| operations | | 0. | | 0. | comment |
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| 1. | | parent_author | "" |
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| parent_permlink | hive-167922 |
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| author | cryptominaty |
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| permlink | the-fear-and-greed-index-hits-the-lowest-level-since-march-2020-what-does-it-mean |
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| title | "The Fear and Greed Index hits the lowest level since March 2020. What does it mean?" |
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| body | "The Fear and Greed Index is one of the simplest yet most popular indicators of cryptocurrency market sentiment. Today, its value fell to 8 on a scale from 0 to 100, which last happened more than two years ago during the crash caused by COVID-19.
The extremely low values of the Fear and Greed Index indicate that there is extreme fear in the cryptocurrency market today.
[Source](https://public.bnbstatic.com/static/academy/uploads-original/a5bbcfc3e00f47949beabaa9e75cefd2.png)
Usually such conditions, according to Warren Buffett's popular motto, are excellent buying opportunities:
> “Be afraid when others are greedy. Be greedy when others are fearful.”
Despite this, a simple and direct interpretation of this indicator in the crypto market could lead to a quick liquidation of funds. Extreme fear often starts early in the dips, and extreme greed long before the ups end.
Furthermore, a historical analysis of the moving averages of the Fear and Greed Index shows that even the end of the declines did not mean the beginning of the uptrends. It turns out that it was always several months from the extreme lows of the index to the start of the cryptocurrency bull market. This time was generally a period of long consolidation and a sideways trend.
The Fear and Greed Index is the lowest since the crash caused by COVID-19
According to data from alternative.me, the current value of the Fear and Greed Index is 8 on a scale of 0 to 100. This value comes after about 6 months of declines. During this period, the index has rarely gone beyond the area of extreme fear (0-24 range) or fear (25-49).
In the entire available history of the index, a value of 8 or less had previously been reached on 3 occasions (red circles).
This happened in February 2018 (BTC bottomed at $6,000), August 2019 (BTC bottomed at $9,320), and March 2020 (BTC bottomed at $3,782).
Even when Bitcoin hit the macro bottom of the previous bear market at $3,156 in December 2018, it pushed the Fear and Greed Index to a reading of 9. Today we see a reading of 8 or less for the fourth time since this indicator was created.
**The end of the bear market? Not necessarily!**
It seems that the extremely low values of the Fear and Greed Index appear only at the absolute lows of the BTC price. However, just by examining the examples above, we can see that extreme readings do not necessarily indicate a bottom in Bitcoin price.
Crypto market analyst @Pladizow tweeted a chart of the BTC price, pointing out areas where the index gave extremely low readings. It confirmed, based on our analysis, that the indicator has been this low only 4 times in history (the March 2020 crash appears twice on its chart). However, he added that "after the first two, the price fell much more."
A chart from LookIntoBitcoin.com provides another illustration of the same concern about not interpreting the index in a simple, reverse way.
Color-codes the long-term chart of Bitcoin to provide insight into the rate of fear and greed on any given day.
In fact, extreme red readings appear at the lows of the BTC price. However, in addition to this, we can successfully find them in various stages of prolonged drops. On the contrary, we see extreme green readings already in the first weeks and months of increases.
Also, hitting the previous two all-time highs ($64,500 in April 2021 and $69,000 in November 2021) was not accompanied by the greenest green dots at all.
**Waiting for the EMO cross**
In a recent analysis for BeInCrypto, @AtomowyInvestor pointed out how the index's moving averages can be used to better determine the state of the cryptocurrency market. He pointed to the so-called “EMO cross”, which in the previous two cases was a good sign for the start of bull markets.
An EMO cross is when the short-term moving averages (quarterly, SMA 91 and half-yearly, SMA 182) of the Fear and Greed Index cross above the long-term (yearly, SMA 365). Furthermore, the quarterly also crosses above the semi-annual at this point.
The last two times this happened (white circles), it marked the start of the 2019 and 2020-2021 bull markets.
[Source INFO]()
Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@cryptominaty/the-fear-and-greed-index-hits-the-lowest-level-since-march-2020-what-does-it-mean)" |
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