The metric uses a numeric scale that goes from zero to hundred for representing the sentiment. When the values are below fifty, it means the market is currently fearful.
On the other hand, values above fifty imply that the market has become greedy. Extreme values of below 25 and above 75 signify sentiments of extreme fear and extreme greed, respectively.
Such extreme values usually occur around bottoms and tops. Hence, some traders believe it’s best to sell during extreme greed and buy more crypto like Bitcoin while the sentiment is that of extreme fear.
Warren Buffet believed in this idea, as suggested by a famous quote of his: “be fearful when others are greedy, and greedy when others are fearful.”
Baron Rothschild is believed to be one of the earliest of traders to follow this philosophy. He said “the time to buy is when there’s blood in the streets.”