Greed

Bitcoin

when

Hope

Selling off a portion of Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>)&nbsp;when the market is in a state of “extreme greed” is a more profitable investment strategy than just buying and hodling it, a Redditor’s analysis suggests.
Redditor u/skogsraw&nbsp;<a href="https://old.reddit.com/r/CryptoCurrency/comments/1bkds50/dca_strategy_using_the_fear_greed_index/" target="_blank" rel="noopener nofollow">shared</a> a March 21 analysis that found that there’s a higher return on investment (ROI) when using the Crypto Fear &amp; Greed Index to dictate a <a href="https://cointelegraph.com/news/what-is-dollar-cost-averaging-dca-and-how-does-it-work">dollar-cost averaging (DCA)</a>&nbsp;strategy compared to a “vanilla” DCA strategy. 
u/skogsraw’s “benchmark” strategy involved DCA’ing $100 into Bitcoin once a week, starting from March 17, 2018, to Sept. 9, 2023, which netted a 124.8% ROI.&nbsp;
The second strategy involved a tiered DCA plan, which would buy $150 of Bitcoin each week during times of “extreme fear,” $100 if in “fear,” $75 if in “neutral,” $50 if in “greed” and $25 if in “extreme greed.”
The third strategy was the same, except it would sell 5% of the accumulated Bitcoin each week if in the “extreme greed” zone. This turned out to be the most profitable strategy, with an 184.2% ROI, compared to the benchmark of 124.8% and the no-selling strategy of 140.1%.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-03/6c9661ec-ce5c-4d85-8f39-6a8e0b93b4db.png" alt="" title="">
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 Results of u/skogsraw’s five-part test measuring BTC’s ROI with various trading strategies. Source: Reddit
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The Redditor didn’t explain why they chose the dates they did but said it wouldn’t have been fair to choose a market bottom or top. The period covered at least two major bear markets and one bull market.&nbsp;
u/skogsraw, however, admitted the tests haven’t been cross-checked and emphasized that testing should also be conducted across more timeframes. 
u/skogsraw’s findings also didn’t factor in Bitcoin network fees to trade, which often peak during times of “extreme greed.”
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 “Regardless these are very convincing results in favor of adjusting your DCA strategy. Hope you find it useful in the upcoming bull!”
</blockquote>
The findings are in line with the Crypto Fear &amp; Greed Index’s view that market corrections typically occur when investors get too greedy.
u/skogsraw also ran two other strategies — “AlphaSquared Risk Model DCA” and “PI Cycle Top Indicator” — which produced ROIs of 385% and 332.4%, respectively.
Commentators, however, called into question the results of the two complex data-driven trading strategies.
Related: <a href="https://cointelegraph.com/news/crypto-fear-greed-highest-bitcoin-69k">Crypto greed index hits highest level since Bitcoin’s $69K ATH</a>
The Crypto Fear &amp; Greed Index score currently <a href="https://alternative.me/crypto/fear-and-greed-index" target="_blank" rel="noopener nofollow">sits</a> at 75/ 100 or “greed.”
It has fallen 15 points since March 5, when it notched 90/ 100 or “extreme greed” — its highest score since Feb. 20, 2021.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-03/518d26d5-22f2-4a41-b4f4-c293e8113efb.png" alt="" title="">
 <figcaption style="text-align: center;">
 Crypto Fear &amp; Greed index score for March 22. Source: Alternative.me
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Magazine: <a href="https://cointelegraph.com/magazine/bitcoin-etf-coinbase-honeypot-hackers-government-trezor-ceo/">Bitcoin ETFs make Coinbase a ‘honeypot’ for hackers and governments: Trezor CEO</a>

Backtested DCA strategy suggests selling Bitcoin at ‘extreme greed’ most profitable

Cointelegraph

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