Fear & Greed Cadence Strategy
Trade the market mood, not the noise — average sentiment over a defined cadence window. A unique sentiment-driven strategy for crypto.
Quick Facts
- Type:
- Sentiment
- Plan:
- Pro
- Asset Classes:
- Crypto
- Indicators:
- Fear & Greed Index · SMA
Platform Backtest
ⓘHow It Works
The Fear & Greed Index (alternative.me) measures market sentiment on a 0–100 scale, where 0 is extreme fear and 100 is extreme greed. It's computed from volatility, momentum, social media, BTC dominance, and search trends.
Most traders use the index reactively: buy when fearful, sell when greedy. This strategy goes a step further: instead of trading individual extreme values (which is noisy), it analyses whether average sentiment over a defined window (the cadence) has been fearful or greedy — and derives a directional signal from that.
The mechanism:
- The daily F&G value is smoothed with a short SMA (default 20 days) — removes day-to-day noise.
- A longer cadence window (default 90 days) computes the average smoothed sentiment.
- A second SMA (cadence smoothing, default 45) produces the final signal line.
- Buy when the cadence signal turns up. Sell when it turns down.
The core idea: market reversals correlate with sustained sentiment shifts, not single extreme prints. By the time the average sentiment over 90 days flips, the market has typically already begun moving — but the signal is statistically more reliable than reading individual fear/greed days.
This strategy is crypto-only because the F&G Index covers crypto specifically — there's no equivalent reliable index for stocks, forex, or commodities.
Entry & Exit Rules
Entry
- ●Cadence-smoothed signal turns upward
- ●Position is currently flat
Exit
- ●Cadence-smoothed signal turns downward
- ●Position is currently long
Parameters
| Name | Default | Range | Description |
|---|---|---|---|
| F&G SMA Period | 20 | 5–60 | Smoothing of daily Fear & Greed values to remove day-to-day noise. |
| Cadence Lookback | 90 | 14–365 | Window over which average sentiment is computed. |
| Cadence SMA Period | 45 | 5–120 | Smoothing of the cadence signal — the final trigger line. |
Live Backtest
The pre-baked mini-backtest is refreshed daily — check back soon or start a live run in the Arena.
Run in Arena →Pseudo-Code
expand
// Step 1: Smooth daily F&G
fg_smoothed = SMA(daily_fg, fg_sma_period)
// Step 2: Average over cadence window
cadence_avg = SMA(fg_smoothed, cadence_days)
// Step 3: Smooth the cadence (final signal line)
cadence_signal = SMA(cadence_avg, cadence_sma_period)
// Entry/Exit: signal direction
if cadence_signal[now] > cadence_signal[now - 1]:
if position.is_flat:
BUY
if cadence_signal[now] < cadence_signal[now - 1]:
if position.is_long:
SELLStrengths & Weaknesses
Strengths
- ●Truly orthogonal to price-based strategies — combines well in portfolios
- ●Uses sentiment that other technical strategies ignore
- ●Filters out single-day fear/greed spikes — reliable directional signal
- ●Unique angle on Bitcoin cycles
Weaknesses
- ●Crypto-only — F&G Index is not available for other asset classes
- ●Lagging by design — 90-day average is slow
- ●Index methodology can change, breaking historical comparability
- ●Doesn't capture macro-level fear (e.g. global recession sentiment)
Frequently Asked Questions
Why not just buy when F&G < 30 and sell when F&G > 70?
Single-day extreme readings are unreliable — F&G can be 25 today and 65 tomorrow during volatile market phases. The cadence approach asks: "has sentiment been on average fearful or greedy over the last 90 days?" That smoothed signal is much more reliable for directional bets.
Does this work on altcoins?
The F&G Index is computed for the broader crypto market (BTC-weighted), so the signal applies to altcoins too — but altcoins amplify both directions. In practice, when F&G cadence flips bullish, altcoins move further than BTC. Combine with the Altcoin Season filter (Pro+) to time altcoin allocation.
How far back does the F&G data go?
alternative.me's index goes back to February 2018. With a 90-day cadence + 45-day SMA, the strategy needs ~135 days of data before producing the first signal. That means usable backtests start around mid-2018.
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Don't want to backtest yourself?
Check out our Strategy Insights Reports — pre-baked deep-dives with historical results, comparisons, and market context.