How Fear and Greed in the Crypto Market Can Lead To Incredible Profit

Tony "The Bull" Severino

Last Updated: March 10, 2020 4:00 pm

3 mins read

crypto extreme fear and greed sentiment warren buffett

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Crypto is a speculative asset class, driven by the emotional state of the investors that make up the market.

Could the sentiment across this subset of investors actually be a lucrative buy and sell signal that can lead to incredible profits?

Warren Buffett: Be Fearful When Others Are Greedy

The Oracle of Omaha himself, legendary investor Warren Buffett, coined the popular quote and investment advice to be “fearful when others are greedy and greedy when others are fearful.”

Buffett is known for his portfolio currently valued at over $242 billion and for residing among the world’s rich list with a net worth of over $81 billion.

Recently, Buffett took his own advice and bought the stock market dip, ignoring the potential recession on the horizon.

Taking a contrarian position can be frightening, but often lead to the largest financial opportunity possible.

And while this is true for all forms of investing, playing against the fear of the crowd can be extremely profitable in crypto markets.

Is Crypto Investor Sentiment a Lucrative Buy or Sell Signal?

According to data, each time the crypto market fear and greed index fell below 20 or lower, indicating extreme fear, the market experienced a powerful reversal.

#Crypto
Fear and Greed index

Who trades this? pic.twitter.com/x6io8GIDqo

— ⛓ live slow, buy LINK ⛓ (@liveslowbuyLINK) March 10, 2020

There appears to be a strong, yet unsurprising correlation between the crypto market sentiment levels reaching extreme fear before reversing.

A fall to 20 on the index happens right ahead of the historic “China pump” that took Bitcoin from $7,200 to $10,500 in two days, breaking records for the third-largest single-day rise ever recorded.

The inverse is true for when sentiment across the market reaches high levels of greed.

Just a month ago, when Bitcoin was trading above $10,000, the fear and greed index had peaked at over 60. Back when Bitcoin had reached $14,000 in mid-2019, the index once again reached extreme greed.

Crypto is a speculative asset class, and the value of each asset is lacking the base fundamentals such as financial statements and more that stocks and other assets provide. Due to the state of speculation driving prices, crypto is especially susceptible to extreme emotional states such as fear and greed.

It’s not just the fear and greed index that can provide clues to the overall sentiment across the market. Logging onto crypto Twitter or perusing crypto-related subreddits will show a lack of talk about Lambos and riches when the market is in fear, but an abundance of the language when the market is in full-greed mode.

While it’s certainly not a science, the correlation is enough to suggest that paying attention to the fear and greed index, and doing as Mr. Buffett says and taking a contrarian position can be extremely profitable.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.