Definition ∞ An Investor Confidence Index is a quantitative measure or composite indicator designed to assess the overall sentiment and optimism of investors regarding the future performance of the cryptocurrency market or specific digital assets. This index aims to quantify collective market psychology. It provides a generalized view of market participants’ outlook.
Context ∞ A rising investor confidence index often precedes or accompanies upward market trends, suggesting a willingness among participants to allocate capital and accept risk. Conversely, a declining index may signal increasing caution or fear, potentially leading to market corrections or sustained downturns. This metric is valuable for gauging psychological shifts that impact market behavior.
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