The Fear and Greed Index is a market sentiment indicator that measures the emotional state of cryptocurrency investors on a scale from 0 (extreme fear) to 100 (extreme greed). It aggregates data from multiple sources including volatility, trading volume, social media activity, Bitcoin dominance, and Google Trends. Traders use it as a contrarian indicator: extreme fear may signal a buying opportunity, while extreme greed may suggest the market is due for a correction.