The Fear & Greed Index is one of the most popular market sentiment indicators. But most people use it wrong. Here's the correct way to interpret it.
How It's Calculated
The index combines six factors: volatility, market momentum, social media sentiment, surveys, Bitcoin dominance, and Google Trends. It outputs a score from 0 (Extreme Fear) to 100 (Extreme Greed).
How to Use It
- Extreme Fear (0-20) — Historically a buying opportunity (but don't catch falling knives)
- Fear (20-40) — Cautious accumulation zone
- Neutral (40-60) — No strong signal
- Greed (60-80) — Market heating up, take profits
- Extreme Greed (80-100) — Potential top, reduce exposure
AI Agent Integration
get_fear_greed → "score": 72, "label": "Greed"