Download This PaperHow Useful is the Crypto Fear and Greed Index When Making Cryptocurrency Investment Decisions
41 Pages Posted: 13 Apr 2023
Date Written: April 3, 2023
Abstract
An analysis of the relationships of both the price and trading volume of Bitcoin, Ethereum, Cardano, Avalanche and Dogecoin with the Crypto Fear and Greed Index, whether the Index is used as a comparison with future prices or measured over a series of previous days, provides very patchy results, with very little agreement between cryptocurrencies. The clearest results are derived when the Index is divided into greed, mid-range and fear but even then, nothing is consistent. Measuring relationships over long periods should be avoided, but when divided into smaller groups, such as months, adjacent months can have totally different outcomes. The Crypto Fear and Greed Index may give investors some idea of the current perception of some aspects of the cryptocurrency market but it is not useful as a tool for making investment decisions.
Keywords: Crypto Fear and Greed Index, Bitcoin, Ethereum, Cardano, Avalanche, Dogecoin
JEL Classification: G10, G11, G15
Suggested Citation: Suggested Citation