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Question #266

How does the Crypto Fear and Greed Index reflect trader emotions in the Bitcoin market?

Category: General
It tracks network transaction fees rather than buyer seller psychology
The index falls towards fear when traders sell in panic
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.

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