BTC Fear & Greed Index Exits Extreme Fear as BTC Holds onto $17,000

Key Insights:

• It was a bullish Monday, with BTC rising by 0.26% to end the day at $17,185.
• Market sentiment towards the Fed and China economic revival plans delivered support.
• The Fear & Greed Index exited the Extreme Fear zone with an increase from 25/100 to 26/100, signaling a mixed Tuesday session.

On Monday, bitcoin (BTC) rose by 0.26%. Following a 1.07% gain on Sunday, BTC ended the day at $17,185. Notably, BTC ended the day at $17,000 for the second time since December 15.

A mixed start to the day saw BTC slip to an early low of $17,123. Steering clear of the First Major Support Level (S1) at $16,986, BTC rallied to a late afternoon high of $17,400. BTC broke through the First Major Resistance Level (R1) at $17,237 and the Second Major Resistance Level (R2) at $17,335 before a pullback to end the day at $17,185.

China Economic Revival Plans and Fed Sentiment Delivered Support

On Monday, updates from China supported a breakout session. Following the removal of COVID-19 restrictions, the PBoC announced plans to revive the economy. Measures included support for private companies and easing its crackdown on tech firms.

Investor sentiment towards the Fed and the US economic outlook added support. Following last week’s Jobs report and ISM Non-Manufacturing PMI, bets for a 25-basis point Fed interest rate hike continued to climb. A less aggressive interest rate path would reduce the risk of a hard landing.

According to the FedWatchTool, the probability of a 25-basis point interest rate hike stood at 78.2% this morning versus 67.7% one week ago and 40.6% one month ago.

The bullish session came despite ongoing investigations into Binance US and uncertainty toward the SEC v Ripple case. For investors looking for further signs of contagion from the crypto winter, Huobi Global remains an area of interest.

Today, there are no US economic indicators for investors to consider. However, Fed Chair Powell could send riskier assets into the deep red. While the markets have bet on a less hawkish Fed, inflation remains elevated, with the US unemployment rate at just 3.5%, a hawkish combination.

The NASDAQ mini was down 11.75 points this morning.

The Fear & Greed Index Exits the Extreme Fear Zone

Today, the BTC Fear & Greed Index rose from 25/100 to 26/100. Significantly, the Index exited the Extreme Fear zone, supported by the BTC hold onto $17,000.

News from China and sentiment towards Fed monetary policy was behind the BTC hold onto $17,000. However, the late BTC pullback from a session high reflected investor apprehension ahead of the Powell speech, which pegged the Index back from a more sizeable move.

As investors prepare for the Powell speech and the US CPI report on Thursday, avoiding sub-20/100 remains the key near-term. The bulls will need to target the pre-FTX collapse November 6 high of 40/100 to support a BTC run at $20,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.09% to $17,201. A range-bound start to the day saw BTC fall to an early low of $17,186 before rising to a high of $17,239.

Technical Indicators

BTC needs to move through the $17,236 pivot to target the First Major Resistance Level (R1) at $17,349 and the Monday high of $17,400. A return to $17,400 would signal a bullish session. However, the crypto news wires and Fed Chair Powell should be market-friendly to support a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,513. The Third Major Resistance Level (R3) sits at $17,790.

Failure to move through the pivot would leave the First Major Support Level (S1) at $17,072 in play. Barring a Fed Chair Powell-fueled sell-off, BTC should avoid sub-$17,000 and the Second Major Support Level (S2) at $16,959. The Third Major Support Level (S3) sits at $16,682.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $16,948. After the bullish cross on Saturday, the 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above S1 ($17,072) would support a breakout from R1 ($17,349) to target R2 ($17,513). However, a fall through S1 ($17,072) would give the bears a run at S2 ($16,959) and the 50-day EMA ($16,948). A fall through the 50-day EMA would send a bearish signal.