Fear and Greed Index

The Fear and Greed Index is a Market Sentiment indicator that measures the emotions driving investors’ behavior, primarily fear and greed. It is calculated using various factors, including volatility, market momentum, Social Media activity, and safe-haven demand. The Index ranges from 0 to 100, where 0 indicates extreme fear and 100 indicates extreme greed. A higher reading suggests that investors are more likely to take risks, while a lower reading indicates that they are more risk-averse.

For example, when the Index is below 20, it may suggest that investors are extremely fearful, often leading to lower Asset prices. Conversely, a reading above 80 may indicate that investors are overly greedy, which can precede market corrections. Historical cases include the 2008 financial crisis, where the Index reflected significant fear as markets plummeted, and the 2020 Stock market rally, where high greed levels signaled potential overvaluation.