The metric uses a numeric scale that runs from one to hundred for representing this sentiment. All values above “50” signify greed in the market, while those below the threshold suggest fear among investors.
The extreme values of above 75 and below 25 imply sentiments of “extreme fear” and “extreme greed,” respectively.
Historically, bottoms in the price of Bitcoin have tended to form during periods of extreme fear. On the other hand, the crypto has observed tops during stretches of extreme greed.
Some investors think that because of this, it’s best to buy during extreme fear, while extreme greed is ideal for selling.