FGI Index Shows ‘Extreme Fear’, Should You Invest Now?
FGI is a daily snapshot of market “sentiment” in the crypto industry, which is updated daily based on different factors, including volatility, market volume, social media, dominance, and trends gathered from various sources on the internet. FGI is designed to eliminate emotional overreaction and enable crypto investors to make rational decisions. Recently, the FGI index shows “extremely fearful.” So, as an investor, should you invest in cryptocurrencies?
As we all know, the main price drivers for almost all assets held by investors come from the fundamentals of the macroeconomy, the technical charts that track trading activity, and the market sentiment of buyers and sellers. The concept suggests that investing can be a vigorous activity regarding market sentiment. For investors, this is essentially the most intuitive way to express. Unfortunately, few people can have the patience, discipline, rationality, and calmness to sell, buy and sell in market transactions based only on logical operations such as entering or holding.
What is the Crypto Fear and Greed Index (FGI)?
One way to measure market sentiment in the cryptocurrency space is to use the Crypto Fear and Greed Index (FGI). FGI provides a snapshot of general market “sentiment” within the crypto space. It is updated daily using a range of weighted factors, including volatility, market volume, social media, dominance, and trends, gathered through various data sources on the internet.
FGI is designed to eliminate overreactions to market sentiment and enable crypto investors to make more rational investment decisions in a more volatile and irrational segment than other markets. When the daily FGI score is generated, the system will draw it on a chart of 0–100, where the levels between 0–50 represent different levels of “fear,” and the levels between 50–100 represent different levels of “fear.” Greed” level.
At press time, the FGI on April 18, 2022, had fallen to 24, in the “extremely fearful” range, indicating the lowest level of investor sentiment toward cryptocurrencies in the near term.
So, what is the Crypto Fear and Greed Index (FGI)?
One way to measure market sentiment in the cryptocurrency space is to use the Crypto Fear and Greed Index (FGI). FGI provides a snapshot of general market “sentiment” within the crypto space. It is updated daily using a range of weighted factors, including volatility, market volume, social media, dominance, and trends, gathered through various data sources on the internet.
FGI is designed to eliminate overreactions to market sentiment and enable crypto investors to make more rational investment decisions in a more volatile and irrational segment than other markets. When the daily FGI score is generated, the system will draw it on a chart of 0–100, where the levels between 0–50 represent different levels of “fear,” and the stories between 50–100 define different levels of “fear.” Greed” level.
At press time, the FGI on April 18, 2022, had fallen to 24, in the “extremely fearful” range, indicating the lowest level of investor sentiment toward cryptocurrencies in the near term.
Is now a good time to buy cryptocurrencies?
Contrarian investors tend to take the opposite approach to “herd mentality.” When the market goes up, the average investor becomes greedy, leading to FOMO sentiment, which means it’s the wrong time to buy. The average individual investor prefers to hold assets for the short term and see a profit by selling when prices rise to what they perceive as psychological highs, but this is the exact opposite of what smart contrarian investors do. FGI helps eliminate emotional overreaction and advocates the investment operation of “buy low and sell high” to help investors maximize the effect of investment.
FGI’s official website states:
• When ‘extreme fear’ is present, it can indicate that investors are too worried, so this would be an excellent time to buy.
• When investors become too greedy, it means the market should correct.
A great feature of the FGI website is that it provides all the historical data tracking of the index since its inception in February 2018, allowing investors to map correlations with meaningful events happening in the cryptocurrency market.
FGI indices should be the information investors focus on FGI
BigONE believes that it is essential to know that no investment model is 100% accurate when conducting cryptocurrency investment research. Therefore, while FGI is a helpful tool, it can only provide data references. However, when crypto asset prices surge to new highs or fall to new lows, it can be a resource that helps investors navigate the cryptocurrency market more clearly and rationally. BigONE
