BTC Fear & Greed Index Avoids Sub-30 Despite a NASDAQ Composite Slump

Key Insights:

• On Wednesday, bitcoin (BTC) fell by 1.63% to end the day at $20,165.
• Fed Chair Powell sent the NASDAQ Composite Index, BTC, and the broader crypto market into the red.
• However, the Bitcoin Fear & Greed Index held steady at 30/100 despite hawkish Powell chatter.

On Wednesday, bitcoin (BTC) fell by 1.63%. Following a 0.04% loss on Tuesday, BTC ended the day at $20,165. Notably, BTC wrapped up the day at $20,000 for the ninth consecutive session while avoiding sub-$20,000 for the eighth day in a row.

After a range-bound morning, BTC responded to the FOMC Statement, rising to a high of $20,817. BTC broke through the First Major Resistance Level (R1) at $20,686 before sliding to a late low of $20,078. BTC fell through the First Major Support Level (S1) at $20,327 and the Second Major Support Level (S2) at $20,154.

Hawkish Fed Chair Powell chatter sent BTC into the deep red. A partial recovery saw BTC move back through S2 to end the day at $20,165.

US economic indicators tested buyer appetite ahead of the all-important FOMC policy decision and press conference.

The Fed lifted rates by 75 basis points, which was in line with expectations. Bets of a December Fed pivot also appeared justified, with the FOMC Statement suggesting a possible policy shift.

However, Fed Chair Powell poured iced water over hopes of a pivot, talking of inflation being too high and the need to press ahead. Powell also noted that the ‘ultimate level of interest rates will be higher than previously expected.’

In response, the NASDAQ Composite Index slid by 3.36%, dragging BTC into the red.

Today, US factory orders, jobless claims, and the ISM Non-Manufacturing PMI will draw interest. We expect the PMI and sub-components to have the most impact.

BTC’s sensitivity to US economic indicators and the FED leaves the correlation with the NASDAQ Composite Index in place near term. This morning, the NASDAQ 100 Mini was down 21 points.

The Fear & Greed Index Holds Steady Despite Powell’s Talk of More Hikes

This morning, the Fear & Greed Index held steady at 30/100 for a second session. The Index avoided sub-30 despite the NASDAQ Composite Index sliding for a third session. While falling short of $21,000, BTC continued to avoid sub-$20,000, suggesting a bottoming out.

However, following the Fed’s policy decision and forward guidance, US economic indicators will provide direction near term. Fed Chair Powell removed hopes of a Fed pivot, leaving riskier assets at the mercy of the US economic calendar.

The Index will need to target 40/100 and the neutral zone to support a BTC bearish trend reversal. A fall to sub-20/100 would signal a BTC slide to sub-$18,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.08% to $20,182. A range-bound start to the day saw BTC fall to an early low of $20,139 before rising to a high of $20,189.

Technical Indicators

BTC needs to move through the $20,353 pivot to target the First Major Resistance Level (R1) at $20,629 and the Wednesday high of $20,817. A BTC return to $20,500 would signal a possible breakout session.

In the case of an extended rally, the Second Major Resistance Level (R2) at $21,092 and $21,500 would likely come into play. The Third Major Resistance Level (R3) sits at $21,831. BTC movement will hinge on US economic indicators.

Failure to move through the pivot would leave the First Major Support Level (S1) at $19,900 in play. Barring an extended sell-off, BTC should avoid sub-$19,500. The Second Major Support Level (S2) at $19,614 should limit the downside. However, the ISM Non-Manufacturing PMI could send BTC into another slide.

The Third Major Support Level (S3) sits at $18,875.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 100-day EMA, currently at $20,101. The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA to deliver mixed signals.

A move through the 50-day EMA ($20,359) would give the bulls a run at R1 ($20,629) and $21,000. However, a fall through the 100-day EMA ($20,101) would bring the 200-day EMA ($19,918) and S1 ($19,900) into view.