BTC Fear & Greed Index Avoids Fear But Sends a Bearish Price Signal

Key Insights:

• It was a bearish end to February, with BTC falling by 1.53% to end the day at $23,142.
• Fed Fear and regulatory risk jitters remained the theme, with Robinhood (HOOD), Visa (V), and Mastercard (MA) news adding to the bearish sentiment.
• The Fear & Greed Index remained within the Neutral zone despite the bearish BTC session, falling from 53/100 to 50/100.

On Tuesday, bitcoin (BTC) fell by 1.53%. Following a 0.25% loss on Monday, BTC ended the month up 0.03% to $23,142. The bearish session left BTC short of the $24,000 handle for the fourth consecutive day.

After a choppy morning, BTC rallied to a late afternoon high of $23,615. Coming up short of the First Major Resistance Level (R1) at $23,885, BTC slid to a late low of $23,066. BTC briefly fell through the First Major Support Level (S1) at $23,125 to test support at $23,000 before ending the day at $23,142.

Regulatory Activity and Fed Fear Leave BTC on the Defensive

The crypto news wires and the NASDAQ Composite Index weighed on investor sentiment on Tuesday.

News of the SEC issuing Robinhood (HOOD) a subpoena sounded the alarm bells. Rumors of Visa (V) and Mastercard (MA) reconsidering their crypto plans were also bearish. Crypto adoption remains a key price driver. A shift in investor sentiment on Main Street toward crypto would significantly impact growth and price action.

However, Fed Fear continued weighing on investor sentiment despite disappointing US economic indicators. In February, the CB Consumer Confidence Index fell from 106.0 to 102.9, with housing sector data also bearish.

While the numbers disappointed, inflation remains sticky, and the US labor market is very tight, supporting a more aggressive interest rate trajectory to bring inflation to target.

The NASDAQ Composite Index fell by 0.10% on Tuesday to round off a bearish month. This morning, the NASDAQ mini was down 54.5 points.

The Day Ahead

Economic indicators will also draw interest. China’s private sector PMIs will influence ahead of the US session. We expect weak numbers from China to reignite recession fears and test the appetite for riskier assets.

US economic indicators and the NASDAQ Composite Index will influence the afternoon session. US manufacturing PMI numbers for February will draw plenty of interest. An unexpected fall in the ISM Manufacturing PMI would be bearish. However, FOMC member chatter will also impact investor appetite throughout the day.

We expect the crypto news wires to continue providing direction. Investors should monitor the crypto news wires for regulatory activity and US lawmaker chatter. Binance and FTX updates need consideration together with news from the ongoing SEC v Ripple case.

The Fear & Greed Index Hits Reverse on a Bearish BTC Session

Today, the BTC Fear & Greed Index fell from 53/100 to 50/100. Significantly, the Index avoided the Fear zone despite BTC falling short of the $24,000 handle for a fourth consecutive session. Regulatory activity and Fed Fear continued weighing on investor sentiment. On Tuesday, BTC saw red for the seventh time in eight sessions.

After falling into the Neutral zone, the Index must return to the Greed zone to support a BTC breakout from $25,000 to target $30,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.10% to $23,165. A bullish start to the day saw BTC rise from an early low of $23,140 to a high of $23,187.

Technical Indicators

BTC needs to move through the $23,274 pivot to target the First Major Resistance Level (R1) at $23,483 and the Tuesday high of $23,615. A return to $23,500 would signal a breakout session. The crypto news wires and Fed chatter should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,823 and resistance at $24,000. The Third Major Resistance Level (R3) sits at $24,372.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,934 in play. However, barring another crypto event-fueled crypto sell-off, BTC should avoid sub-$22,500. The Second Major Support Level (S2) at $22,725 should limit the downside.

The Third Major Support Level (S3) sits at $22,176.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 100-day EMA ($23,492). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through R1 ($23,483) and the 100-day EMA ($23,492) would support a breakout from the 50-day EMA ($23,548) to target R2 ($23,823) and $24,000. However, failure to move through the 50-day EMA ($23,548) would leave the 200-day EMA ($22,940) and S1 ($22,934) in view. A move through the 50-day EMA ($23,548) would send a bullish signal.