Bitcoin Fear & Greed Index Heads Towards the Extreme Fear Zone

Key Insights:

• On Saturday, bitcoin (BTC) ended a six-session losing streak despite a return to sub-$21,000 and a new August low.
• There were no crypto events to shift the bearish sentiment that led BTC into the deep red on Friday, with dip buyers delivering much-needed support.
• In response to the latest BTC reversal, the Bitcoin Fear & Greed Index fell from 29/100 to 27/100, reflecting increased investor anxiety.

On Saturday, bitcoin (BTC) rose by 1.48%. Partially reversing a 10.17% slide from Friday, BTC ended the day at $21,141. Notably, BTC ended a six-session losing streak despite falling to a new August low of $20,769.

A bullish morning saw BTC rise to a mid-morning high of $21,370 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $22,426, BTC slid to a new August low of $20,769.

However, steering clear of the First Major Support Level (S1) at $20,017, BTC bounced back to end the day at $21,141.

There were no crypto news events or stories to support the late recovery. The lack of influence from the crypto market leaves BTC susceptible to another reversal and a visit to sub-$20,000.

In the week ahead, FOMC member chatter will influence ahead of US indicators that include private sector PMIs (Tue), core durable goods orders (Wed), jobless claims and Q2 GDP numbers (Thurs), inflation (Fri), and personal spending (Fri) figures.

From the Fed, there is also the Jackson Hole Symposium (Thurs/Fri) to test investor resilience.

With a busy economic calendar for the crypto market to navigate, we expect the NASDAQ 100 to continue to influence in the week. Last week, the NASDAQ ended Friday down by 2.01%.

Bitcoin Fear & Greed Index Nears the Extreme Fear Zone

Today, the Fear & Greed Index fell from 29/100 to 27/100 to sit on the border with the Extreme Fear zone (25/100). The Index has been on a downward trend after hitting a high of 47/100 on August 14, suggesting further BTC downside over the near term.

The Index needs to return to 40 to support a BTC return to $25,000. However, a fall into the Extreme Fear zone would see BTC at sub-$20,000 to give the bears a look at the current year’s low of $17,605.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.22% to $21,187. A range-bound start to the day saw BTC fall to an early low of $21,124 before rising to a high of $21,326.

Technical Indicators

BTC needs to avoid the $21,093 pivot to target the First Major Resistance Level (R1) at $21,418 and eye a return to $22,000.

BTC would need a bullish morning session to support a break out from the Saturday high of $21,370.

An extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $21,694 and resistance at $22,000. The Third Major Resistance Level (R3) sits at $22,295.

A fall through the pivot would bring the First Major Support Level (S1) at $20,818 into play. Barring another extended sell-off, BTC should steer clear of sub-$20,000. The Second Major Support Level at $20,492 should limit the downside. The Third Major Support Level (S3) sits at $19,891.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $22,805.

After a bearish cross of the 50-day EMA through the 200-day EMA, the 50-day EMA pulled back from the 200-day EMA. The 100-day EMA narrowed to the 200-day EMA, delivering bearish price signals.

A bearish cross of the 100-day EMA through the 200-day EMA would bring sub-$20,000 into play.

For the bulls, a BTC move through R1 ($21,418) and R2 ($21,694) to $22,000 would bring R3 ($22,295) and the 50-day EMA ($22,805) into view. However, a further pullback from the 50-day EMA would give the bears a look at sub-$20,000.

Trend Analysis

Looking at the trends, BTC would need a move through the August high of $25,203 and $25,500 to target the June high of $31,956. Avoiding the Saturday low of $20,769 would support a move through the 50-day EMA to ease selling pressure.

A BTC return to $25,000 would give the bulls a run at the June high. From $32,000, BTC should have a clear run at the May high of $40,004.

For the bears, the June 18 low of $17,601 remains the target. A fall through $20,000 and the July low of $18,768 would likely test investor resilience.

On Saturday, BTC fell through the August 19 low of $20,790. The next bear target is the July 26 low of $20,724.