BTC Fear & Greed Index Exits the Fear Zone on BTC Return to $21,000

Key Insights:

• It was a bullish Saturday, with BTC rallying by 5.20% to end the day at $20,966.
• Sentiment towards FTX contagion and Fed monetary policy remained the key drivers on Saturday.
• The Fear & Greed Index jumped from 46/100 to 52/100 on BTC return to $21,000.

On Saturday, bitcoin (BTC) rallied by 5.20%. Following a 5.70% breakout on Friday, BTC ended the day at $20,966. Notably, BTC visited $21,000 for the first time since November 7 and extended its winning streak to seven sessions, its longest winning streak since March 2022.

A bullish first hour saw BTC surge from a low of $19,897 to a high of $21,378 before easing back. BTC broke through the First Major Resistance Level (R1) at $20,378 and the Second Major Resistance Level (R2) at $20,827. However, the pullback saw BTC briefly fall back through R2 and R1 before ending the day at $20,966.

FTX and US Economic Indicators and Corporate Earnings Deliver $21,000

Bullish momentum from Friday continued into the Saturday session. The sentiment toward Fed monetary policy, the US economic outlook, and upbeat corporate earnings supported riskier assets on Friday.

However, easing FTX contagion risk supported the reversal of losses stemming from the collapse of FTX. The news of $5 billion in cash & cash equivalents and $4.6 billion in nonstrategic assets continued resonating on Saturday. While a forced sale of nonstrategic assets may not fetch $4.6 billion, the numbers suggest that creditor losses could be minimal.

While FTX and sentiment towards the Fed and the US economy are BTC bullish, regulatory risk remains a headwind. The outcome of the SEC v Ripple case and the SEC regulating by enforcement could test buyers at current levels. There is also a high degree of uncertainty toward the regulatory landscape, which will likely change in the wake of Terra Labs and FTX.

Today, there are no external market forces to influence, with the US markets closed on Monday. Investors should monitor the crypto news wires, however. FTX updates and regulatory chatter need consideration.

The Fear & Greed Index Responds to BTC Return to $21,000

Today, the BTC Fear & Greed Index jumped from 46/100 to 52/100. Significantly, the Index returned to the Neutral zone for the first time since August 14, 2022. Easing FTX contagion, bets of a Fed 25-basis point interest rate hike, and hopes of a soft landing supported the BTC return to $21,000 and the Index exit from the Fear zone.

Having avoided sub-20/100 and retraced the slump in response to the collapse of FTX, the Index needs to return to the Greed zone to support the BTC move towards $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 1.12% to $20,732. A mixed start to the day saw BTC rise to an early high of $21,012 before falling to a low of $20,566.

Technical Indicators

BTC needs to move through the $20,747 pivot to target the First Major Resistance Level (R1) at $21,597. A move through the Saturday high of $21,378 would support another bullish session. However, the crypto news wires should be market-friendly to support another breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $22,228 and resistance at $22,500. The Third Major Resistance Level (R3) sits at $23,709.

Failure to move through the pivot would leave the First Major Support Level (S1) at $20,116 in play. Barring a crypto event-fueled sell-off, BTC should avoid sub-$20,000 and the Second Major Support Level (S2) at $19,266. The Third Major Support Level (S3) sits at $17,785.

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 $18,623. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($18,623) would support a breakout from R1 ($21,597) to target R2 ($22,228). However, a fall through S1 ($20,116) would give the bears a run at the S2 ($19,266) and 50-day EMA ($18,623). A fall through the 50-day EMA would signal a shift in sentiment.

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 a fall through the September low of $18,210 would support a move back toward $25,000.

However, the trend has turned bearish following Wednesday’s new September low. A fall through the September low of $18,210 would bring sub-$18,000 and the June low of $17,601 into play. A Fear & Greed Index return to 30/100 should support a shift in sentiment.

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Working on Bitcoin Fear & Greed Index – Review of price action from the day prior and key drivers – link to NASDAQ – Fear & Greed Index trends – BTC price action for the day ahead – This includes resistance pivot and support, EMAs, and Trend analysis.