Pro Tip: Don’t go to a great wine tasting at 1PM with your friends, get an extra bubbly flight, and a beer or you’ll forget you have a post to write that day. Well, maybe do that if you want to have a fun day. Whatever floats your boat.
So this week I want to show the index that I’ve been posting compared against one of the common fear and greed indices in the crypto space.
Common Fear and Greed Index
Here is the data imported into a chart with the cycle data applied and the common indicators I use, the 50-Day EMA and the cyclic RSI.
RSI indicator tradingview script
RSI indicator post
Now here is the custom index I’ve dubbed the Smurf Sentiment Index.
Interesting things to note. The “price action” (if you can call it that) is largely the same general directionality and the cycles are very similar. The reason I prefer the custom index over the standard index is in the disparity of extremity of moves. The moves of the standard FNG index are pretty much all fear or all greed with very little in between. I believe that’s largely because the index is based largely on social media sentiments. The SSI has less volatility. I believe this is because it is created by measuring changes in currently held positions of futures trades. Something I often try to convince people is that a person can feel a way but not actually do anything about it.
Note the decline in early May where we had the initial capitulation from $54k. The standard FNG would have you believe the market was at peak fear. Yet open positions hadn’t been reduced to a level that would reflect a general expectation of a decline in the market. There was still literal hope despite “expressed” fears. Same with the second decline in September.
Fast forward to January. Both indices are showing peak fear. As I expressed here back on the 4th of Feb the agreement of many bullish macro and technical factors while occurring at a peak sentimental fear in the market are very often prime indications the market is turning in a bullish direction.
Weekly support levels are holding.
Daily support levels are holding and price is setting higher lows despite all the volatility.
As many perma-bulls like to say, “the underlying fundamentals haven’t changed.” They are right, the fundamentals do look good. So do the technicals. Until we start losing these levels I see no reason to be fearful of the market. Don’t let your emotions keep you away from the prime time in the market to have amazing gains in the future. As I’ve said before, when the general view of TA in the space is one way, there’s a good chance it’s about to be wrong and there’s no shortage of worried analysts talking about being prepared for the bear market or people going to safety/stablecoins/cash in fears of another big drop. Consider how many of them were wrong or missed the market peak in November. What makes you think they are right now? They are still probably doing the same old things they did to look at the market back then. While another dip is a possibility it won’t be invisible beforehand. There are plenty of reliable indications that the market is in transition to a bullish phase. The only thing you need to do is make your buys at supports, pay attention to previous levels of support and have some discipline and mental fortitude.
Rant over. :-p
Have a great weekend.
@theprivacysmurf
Its good to have an alternative view of the market - and when its right more often than not, its even better. Thanks Terry.
Thanks so much for your Smurf Sentiment update.