BTC Fear & Greed Index Avoids Fear Despite Increasing Regulatory Risk

Key Insights:

• It was a bearish Friday, with BTC falling by 0.73% to end the day at $21,641.
• Fed Fear and crypto regulatory risk left BTC at sub-$22,000 and in the red.
• The Fear & Greed Index remained within the Neutral zone despite rising from 48/100 to 49/100.

On Friday, bitcoin (BTC) fell by 0.73%. Following a 5.04% slide on Thursday, BTC ended the day at $21,641. BTC wrapped up the day at sub-$22,000 for the second time since January 19.

A bullish start to the day saw BTC rise to an early high of $21,937. Coming up short of the First Major Resistance Level (R1) at $22,635, BTC fell to a late low of $21,500. Steering clear of the First Major Support Level (S1) at $21,332, BTC found late support to end the day at $21,641.

Fed Fear and Regulatory Risk Leave BTC at Sub-$22,000 Levels

On Friday, US economic indicators weighed on BTC and the broader crypto market. The Michigan Consumer Sentiment Index rose from 64.9 to 66.4 in February, according to prelim figures. Significantly, the Michigan Inflation Expectations Index increased from 3.9% to 4.2%, fueling fears of a more hawkish Fed policy stance.

The Friday stats and Fed Fear left the NASDAQ Index down by 0.61% for the session.

Crypto regulatory risk added to the bearish mood as investors continued digesting the latest SEC move against US crypto staking services.

On Friday, SEC Chairman Gary Gensler spoke on CNBC about the Kraken case, saying,

“The problem was they were not disclosing to the investing public the risks that the investing public was entering into. And we have a basic bargain in the United States since the 1930s. You can take whatever risks you want. Companies like Kraken can offer investment contracts and investment schemes, but they have to have full, fair, and truthful disclosure.”

Coinbase (COIN) struggled on Friday, falling by 4.26%. On Thursday, Coinbase shares slumped by 14.13% on the news of Kraken settling with the SEC and ceasing US crypto staking services.

Investors should continue monitoring the crypto news wires for FTX, Genesis, and Silvergate Bank updates. Regulatory chatter and SEC v Ripple news will also provide direction.

The Fear & Greed Index Steadies in the Neutral Zone

Today, the BTC Fear & Greed Index remained within the Neutral zone despite rising from 48/100 to 49/100. Fed Fear and regulatory risk continued to weigh on investor sentiment, pinning the Index back from a return to the Greed zone.

After returning to the Neutral zone, the Index must avoid the Fear zone to support a BTC run at $23,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.14% to $21,672. A range-bound start to the day saw BTC fall to an early low of $21,614 before finding support.

Technical Indicators

BTC needs to move through the $21,693 pivot to target the First Major Resistance Level (R1) at $21,885 and the Friday high of $21,937. However, a return to $22,000 would signal a breakout session. The crypto news wires will need to 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 $22,130. The Third Major Resistance Level (R3) sits at $22,567.

Failure to move through the pivot would leave the First Major Support Level (S1) at $21,448 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$21,000. The Second Major Support Level (S2) at $21,256 should limit the downside. The Third Major Support Level (S3) sits at $20,819.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 200-day EMA ($21,702). 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 the 200-day EMA (21,702) would give the bulls a run at R1 ($21,885) and $22,000. However, failure to move through the 200-day EMA ($21,702) would bring S1 ($21,448) into view. A move through the 50-day EMA would send a bullish signal.