Fear vs. Greed

Markets oscillate between optimism and pessimism. Recognising where you are in the cycle matters more than predicting where it will go next. Extreme greed often precedes corrections; extreme fear often precedes recoveries.

Loss aversion makes losses feel roughly twice as painful as equivalent gains feel good. This pushes most investors to sell near lows and buy near highs — the exact opposite of what works.

The Crypto Fear & Greed Index, funding rates on perpetual futures, social media volume, and implied volatility all hint at sentiment extremes. None are perfect signals on their own.

The classic Buffett line — be greedy when others are fearful, fearful when others are greedy — is hard precisely because it feels wrong in the moment. Pre-committing to rules helps remove the in-the-moment emotion.