What is the Panic and Greed Index? A Comprehensive Analysis of the "Sentiment Barometer" for Crypto Assets.

In the highly volatile cryptocurrency market, the Fear & Greed Index is hailed as the emotional compass for investors. This indicator quantifies market sentiment on a scale from 0 to 100: 0 represents extreme fear, 100 represents extreme greed, and is divided into four key intervals:

• 0-24 (Extreme Fear)
• 25-49 (Fear)
• 50-74 (Greed)
• 75-100 (Extreme Greed).

Its core idea is derived from Buffett's famous saying: "Be fearful when others are greedy, and greedy when others are fearful," aiming to help investors seize opportunities in extreme market emotions.

How do indices work? Multi-dimensional data fusion calculation

The index is developed by the platform Alternative.me based on the characteristics of the cryptocurrency market, calculated comprehensively through six major weighted indicators (total 100%):

1. Volatility (25%): The abnormal rise in Bitcoin's short-term volatility usually indicates market fear.
2. Market Momentum and Trading Volume (25%): Continued volume increase may indicate the spread of greed sentiment.
3. Social Media Sentiment (15%): Analyze the interaction volume and keyword sentiment on platforms like Twitter/X (e.g., "bull market" "crash").
4. Bitcoin's Dominance (10%): The influx of funds into Bitcoin (increasing share) often reflects risk-averse sentiment, while a shift towards altcoins indicates an increased risk appetite.
5. Google Trends (10%): The change in search popularity for keywords such as "Bitcoin crash" or "buy cryptocurrency".
6. Survey (15%, paused): Historical sentiment voting data.

##Practical Significance: Extreme emotions are often contrarian signals

• Extreme Fear (below 25): The market may be oversold, for example, the panic triggered by Trump's tariff policy in April 2025 caused the index to drop to 21-25, creating a potential buying opportunity.
• Extreme Greed (above 75): Warns of an overheated market, such as when Bitcoin surpassed $68,000 in March 2024, and the index reached 90, followed by a pullback.

Historical data shows that panic zones often correspond to price lows, while greed zones should be cautious of bubble risks.

##Limitations: Not a universal indicator, needs to be combined with other tools

1. Bitcoin Centralization: Mainly reflects BTC sentiment, the altcoin market may deviate.
2. Lagging nature: It relies on historical data, making it difficult to predict unexpected black swan events (such as exchange hacking incidents).
3. Version differences: Different platforms (such as CoinMarketCap, Glassnode) have different weighting algorithms, which may lead to discrepancies in results.

Professional advice: Use in conjunction with on-chain data (TVL) and technical indicators (RSI) to avoid relying solely on one.

##Conclusion: Rationally Navigating the Waves of Emotion The Fear and Greed Index provides investors with a real-time snapshot of market sentiment, especially valuable as a strategic reference during extreme values. However, the cryptocurrency market is driven by multiple variables, and successful investment still requires a combination of fundamental analysis, risk management, and calm judgment. As the market has repeatedly verified the truth: "Indicators are tools, decisions are in the hearts of people."

Author: Blog Team *This content does not constitute any offer, solicitation, or advice. You should always seek independent professional advice before making any investment decisions. *Please note that Gate may restrict or prohibit all or part of the services from restricted areas. Please read the user agreement for more information, link: