“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”
― Warren Buffett

Billionaire investor, Warren Buffet is famously called the greatest investor of all time. He was known for his wealth-generating methods of being greedy in times when other markets are afraid. If you’re in crypto and like that philosophy, now would be the perfect time to buy.

That’s because the crypto markets are currently in “extreme fear,” according to the Crypto Fear & Greed Index (FGI), a free interactive dashboard that’s updated daily to provide the general market sentiment based on a variety of weighted factors.

It calculates the FGI score every day and plots it onto a 0-100-scale, with 50 representing Fear and 50 representing Greed. Per the graph below, the FGI states that sentiment is extremely fearful, and it hasn’t been this low in nearly four months.

Interestingly, the right hand side of the graphic shows that just a few weeks ago sentiment was more than triple the current number and was in the “extreme greed” range. It was one day before September’s flash crash which drove both short-term and long leverage traders out of the market.

Contrarian investors can take advantage of the current sentiment to grab top-10 crypto assets per market capital that trade at discounted prices.

Contrarian investing is the strategy of moving in the opposite direction of the dominant sentiment or market trend – basically zigging when everyone else is zagging. This investment strategy is based on the idea that the emotions of fear or greed drive the market’s movements.

Willy Woo was a crypto-influencer and on-chain analyst who addressed this buying opportunity in his weekly forecasting newsletter. He attributed FUD to the declines in China’s real estate market after the collapse of China Evergrande Group.

“Investors continue to buy, unfazed by the equities sell-off. Bullish demand and bearish price action diverge, which means that a bullish squeeze on supply will occur sooner than expected. Although there is bearish pricing locally, my forecast has not changed since the previous letter. I expect a bullish move to explore the $50k-$60k price range over the next 2 weeks,”
wrote Woo.

One of the reasons for Woo’s optimism is this chart he created that classifies HODLers into three distinct groups – strong, medium, and weak. He then follows the ebb and flow of their respective “strength” as coins move between each group – as depicted in the extremely wavy three-line graph along the bottom of the chart. Woo thinks the right conditions exist for a strong rally because strong HODLers have reached their peak, and medium and weak HODLers seem to be fading.

“As we can see in this chart, the current setup is moving into this structure, which furthers our case for a bullish rally developing,”
wrote Woo.

On The Flipside

• Whether it’s the “stock-to-flow” or “Pi Cycle Top Indicator,” or a proprietary model developed by Willy Woo, an investing model is only as good as its data inputs.
• Each model should only be used as a reference point.
• Market models should not be used in isolation to help with buying or selling.

What You Need to Care About

Three main factors drive any kind of trading market: sentiment, technicals, and fundamentals. While the first and second factors can be more quantitatively driven, the last factor is qualitative. No matter how the markets are moving, it’s critically important to remain calm and collected, making logical decisions based on data rather than irrational decisions driven by emotion.

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