The cryptocurrency Fear and Greed Index has declined to 42, signaling a distinct shift in market sentiment from the ‘Neutral’ category to ‘Fear’. This drop from a previous level of 49 points to increased investor caution and heightened uncertainty within the cryptocurrency market.
The index, a key sentiment gauge, calculates its score using a weighted methodology: volatility (25%), market trading volume (25%), social media hype (15%), market surveys (15%), Bitcoin dominance (10%), and Google Trends analysis (10%).
This measurable shift towards ‘Fear’ reflects growing apprehension among market participants. Traders and analysts routinely monitor this index to assess prevailing sentiment, using it as a valuable tool to gauge market psychology and aid in adjusting trading and investment strategies accordingly.