Fear & Greed Index

Definition ∞ The Fear & Greed Index is a sentiment indicator that measures the prevailing emotional state of cryptocurrency market participants. It aggregates various market factors, such as volatility, trading volume, social media sentiment, and market dominance, into a single numerical score. This index ranges from extreme fear to extreme greed, providing a gauge of investor psychology. It helps traders assess whether the market is overly optimistic or pessimistic.
Context ∞ Crypto news outlets regularly cite the Fear & Greed Index to provide context for market movements and investor behavior. A high greed score might suggest an impending market correction, while extreme fear could signal a buying opportunity. This index serves as a quick reference for understanding the psychological forces driving short-term price action in digital assets.