What is the Fear and Greed Index and how does it affect Bitcoin market sentiment?
Why is this the correct answer?
The Fear and Greed Index is a sentiment gauge that aggregates factors such as volatility, market momentum, social media trends, and trading volume to display a single score reflecting overall investor psychology. When the index shows fear, traders may become cautious and sell, potentially lowering prices. Conversely, high greed readings suggest overconfidence and potential market tops. Beginners can use this tool to time entries and exits by understanding when the market is driven by extreme emotions rather than fundamentals or technical factors.
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