NEO Sentiment offers an innovative tool – the Crypto Fear & Greed Index. This index crunches data from various sources, analyzing emotional market behavior to generate a simple measure of fear or greed among crypto investors. This tool aims to safeguard investors from irrational reactions and help them seize potential opportunities
NEO Sentiment
NEO Sentiment
Crypto Fear & Greed Index
Each day, we analyze emotions and sentiments from different sources and crunch them into one simple number: The Fear & Greed Index for Bitcoin and other large cryptocurrencies.
Why Measure Fear and Greed?
Crypto markets are highly emotional, leading to greed during rallies and fear during dips. Our Fear & Greed Index mitigates such reactions by simplifying market sentiment into a 0-100 meter: 'Extreme Fear' to 'Extreme Greed'. This guides investors towards rational decision-making, identifying potential buying opportunities or imminent correctionDeep Learning, another critical technology, enables NEO Oracle to learn and improve from vast amounts of unstructured data. The more data fed into the system, the better the models perform, identifying complex patterns that would remain elusive to traditional models.
Data Sources
We are gathering data from the five following sources. Each data point is valued the same as the day before in order to visualize a meaningful progress in sentiment change of the crypto market. First of all, the current index is for bitcoin only (we offer separate indices for large alt coins soon), because a big part of it is the volatility of the coin price.
The system employs market movement prediction techniques to forecast short-term and long-term price movements. By analyzing historical data and current market conditions, NEO Oracle determines the most probable direction of market movement.
A crucial aspect of this strategy is considering the limits and fees. NEO Oracle takes into account transaction fees, withdrawal fees, and any potential restrictions on trading volume to maximize the net profit.
But let’s list all the different factors we’re including in the current index: Volatility (25 %)
We’re measuring the current volatility and max. drawdowns of bitcoin and compare it with the corresponding average values of the last 30 days and 90 days. We argue that an unusual rise in volatility is a sign of a fearful market.
Market Momentum/Volume (25%)
Also, we’re measuring the current volume and market momentum (again in comparison with the last 30/90 day average values) and put those two values together. Generally, when we see high buying volumes in a positive market on a daily basis, we conclude that the market acts overly greedy / too bullish.
Social Media (15%)
While our reddit sentiment analysis is still not in the live index (we’re still experimenting some market-related key words in the text processing algorithm), our twitter analysis is running. There, we gather and count posts on various hashtags for each coin (publicly, we show only those for Bitcoin) and check how fast and how many interactions they receive in certain time frames). A unusual high interaction rate results in a grown public interest in the coin and in our eyes, corresponds to a greedy market behaviour.
Surveys (15%) currently paused
Together with strawpoll.com (disclaimer: we own this site, too), quite a large public polling platform, we’re conducting weekly crypto polls and ask people how they see the market. Usually, we’re seeing 2,000 – 3,000 votes on each poll, so we do get a picture of the sentiment of a group of crypto investors. We don’t give those results too much attention, but it was quite useful in the beginning of our studies. You can see some recent results here.
Dominance (10%)
The dominance of a coin resembles the market cap share of the whole crypto market. Especially for Bitcoin, we think that a rise in Bitcoin dominance is caused by a fear of (and thus a reduction of) too speculative alt-coin investments, since Bitcoin is becoming more and more the safe haven of crypto. On the other side, when Bitcoin dominance shrinks, people are getting more greedy by investing in more risky alt-coins, dreaming of their chance in next big bull run. Anyhow, analyzing the dominance for a coin other than Bitcoin, you could argue the other way round, since more interest in an alt-coin may conclude a bullish/greedy behaviour for that specific coin.
Trends (10%)
We pull Google Trends data for various Bitcoin related search queries and crunch those numbers, especially the change of search volumes as well as recommended other currently popular searches. For example, if you check Google Trends for “Bitcoin”, you can’t get much information from the search volume. But currently, you can see that there is currently a +1,550% rise of the query „bitcoin price manipulation“ in the box of related search queries (as of 05/29/2018). This is clearly a sign of fear in the market, and we use that for our index.
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