Investing, whether it be having a physical store or opting to take the risk on the stock market and even on cryptocurrency, is an excellent way to grow your hard-earned money. But you have to remember that the decisions that you make could also make or break you. For this reason, you really have to be careful. You can seek the advice of the experts or you can also observe what the trend is on your chosen industry to invest in and be wise.
In recent years, cryptocurrency, particularly Bitcoin, has attracted the attention of many investors. The popularity of this market is continuously increasing. However, just like any type of investment, it has its ups and downs too. People who are into this type of digital currency tend to rely on the Bitcoin Fear and Greed Index as they find it quite useful in their decision-making.
What Is the Bitcoin Fear and Greed Index?
This index was actually created and based on an old Wall Street saying that ‘Fear’ and ‘Greed’ are the two main emotions that drive the financial markets. These powerful emotional states are said to be the primary influencers on how much money investors are willing to put in a certain stock or if they even want to invest at all.
Simply put, this index shows the movements of investors; fear or greed.
How Does the Index Work?
Bitcoin’s Fear and Greed Index has values from 0 to 100. 0 represents absolute fear, while 100 means absolute greed. When people see that the prices are getting higher, they tend to be greedy. But when they notice that the prices are going down, they quickly get into the panic mode. These behaviors are affecting the movements in the market while putting more pressure on new buyers as well as other active investors.
As young as it is, people involved in this industry seem to have a herd mentality. They tend to neglect their own decisions. Instead, they go where the majority goes. And that is exactly what the index is indicating.
What Is Bitcoin’s Fear and Greed Index Showing Right Now?
In the middle of 2019, when Bitcoin was trading at a whopping price of $14,000, the index has reached the value of extreme greed. However, towards the end of 2019 up to this day this writing was made, due to several factors, particularly the panic that Covid-19 has brought about, there seems to be a significant movement towards extreme fear. People are pulling out their investments thinking that this will save them from losing more money.
What Others Are Saying About the Index
Although the Fear and Greed Index of Bitcoin is showing values for extreme fear and some investors think that it may take quite a while for BTC price to go up again, some people still believe that all these will eventually lead to more profit as they listen to Warren Buffett’s advice “be fearful when others are greedy and be greedy when others are fearful”.
Since a lot of people are in extreme panic and fear right now, others may take the chance to be greedy with the thought of gaining more profit soon.