Question #266 ·
How does the Crypto Fear and Greed Index reflect trader emotions in the Bitcoin market?
- It tracks network transaction fees rather than buyer seller psychology
- The index falls towards fear when traders sell in panic Right answer
- It measures mining difficulty instead of sentiment among retail investors
- The index rises when traders choose to ignore market signals
Why is this the correct answer?
This is correct because the Fear and Greed Index measures the balance of buying and selling pressure. When many traders panic sell Bitcoin, the index reading drops toward extreme fear. That drop signals widespread pessimism, helping beginners understand that low sentiment readings often mark a potential market bottom as selling pressure saturates.