Question #292 ·
How does the Crypto Fear & Greed Index reflect investor mood after a sharp price drop?
- The indicator flips to neutral, suggesting balanced market outlook overall.
- Fear and Greed Index signals investors are experiencing extreme fear. Right answer
- It implies that investors are confused, market direction is random.
- It shows investors have become excessively greedy buying more Bitcoin.
Why is this the correct answer?
This is correct because the Crypto Fear & Greed Index is a sentiment gauge that ranges from zero to one hundred. When prices fall sharply, the index often moves toward the Extreme Fear zone, indicating that many investors are selling in panic. For beginners, it helps to know that a reading below thirty often signals fear, as participants worry about further losses. Extreme fear can create buying opportunities because it suggests pessimism is at a peak and sellers may be exhausted.