What is the fear and greed index?

The Fear and Greed Index is a market sentiment indicator used to gauge investor sentiment in the stock market, typically ranging from 0 (Extreme Fear) to 100 (Extreme Greed). It combines various data sources, including market momentum, stock price strength, and safe haven demand, to assess whether investors are too bullish or bearish.

Should you use the fear and greed index as a valuation indicator?

If you agree with the logic that investor sentiment pushes stock prices up or down, you can use the Fear and Greed Index as a general valuation indicator. An index value below 45, in the fearful range, could mean investors are generally underpricing stocks.

What does 0 mean in fear & greed?

This is a plot of the Fear & Greed Index over time, where a value of 0 means "Extreme Fear" while a value of 100 represents "Extreme Greed". Why Measure Fear and Greed? The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out).