BTC Fear & Greed Index Eyes Extreme Greed to Signal a BTC Breakout

Key Insights:

• It was a bullish Saturday, with BTC rallying by 3.11% to end the week at $23,746.
• Investors brushed aside the increased crypto market scrutiny from Friday, with sentiment toward Fed monetary policy delivering support.
• The Fear & Greed Index responded to the bullish session, rising from 55/100 to 61/100.

On Sunday, bitcoin (BTC) rallied by 3.11%. Reversing a 0.16% loss from Saturday, BTC ended the week up by 4.55% to $23,746. BTC struck a new 2023 high of $23,962 while avoiding sub-$23,000 for the first time since August 19.

A mixed start to the day saw BTC fall to an early low of $23,000 before making a move. Steering clear of the First Major Support Level (S1) at $22,876, BTC rallied to a late high of $23,962. BTC broke through the Major Resistance Levels to wrap up the day at $23,746. The Third Major Resistance Level (R3) at $23,639 delivered late support.

Fed Policy Sentiment and Hopes of a Soft Landing Delivered Support

Following a White House Administration-fueled pullback on Saturday, investors turned their attention to the Fed on Sunday. Bets of a 25-basis point Fed interest rate hike on Wednesday and a less aggressive interest rate trajectory to bring inflation to target delivered price support.

In the US, inflationary pressures have eased, with the economy showing early cracks because of tighter credit conditions. Despite tight labor market conditions, bets of an interest rate hold in March have also risen, supporting BTC and the broader crypto market.

From the crypto market, easing FTX and Genesis contagion risk and hopes of a Ripple win in the ongoing SEC v Ripple case are also tailwinds. However, regulatory risk remains a headwind, with the US administration calling on regulators to take more measures to mitigate cryptocurrency risk.

Today, there are no US economic indicators for investors to consider. However, the NASDAQ Composite Index will likely influence the afternoon session as investors look ahead to the Wednesday interest rate decision. This morning, the NASDAQ mini was down 23.25 points.

Investors should also monitor the crypto news wires. SEC v Ripple, FTX, and Genesis updates need consideration.

The Fear & Greed Index Inches Towards Extreme Greed

Today, the BTC Fear & Greed Index rose from 55/100 to 61/100. A bullish BTC session and a new 2023 high supported the move toward the Extreme Greed zone.

While increased crypto market scrutiny has tested investor appetite, easing contagion risk and sentiment toward Fed monetary policy and the US economic outlook have provided support.

Near-term, the Index needs to avoid a return to the Neutral zone (54/100) to support a BTC return to $25,000. A fall into the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.15% to $23,710. A mixed start to the day saw BTC rise to an early high of $23,785 before falling to a low of $23,700.

Technical Indicators

BTC needs to avoid a fall through the $23,569 pivot to target the First Major Resistance Level (R1) at $24,139. A move through the Sunday high of $23,962 would signal another breakout session. However, the crypto news wires and the NASDAQ Index need to provide support.

In the event of another bullish session, the bulls would likely test the Second Major Resistance Level (R2) at $24,531. The Third Major Resistance Level sits at $25,493.

A fall through the pivot would bring the First Major Support Level (S1) at $23,177 into play. However, barring a broad-based crypto sell-off, BTC should avoid sub-$23,000 and the Second Major Support Level (S2) at $22,607. The Third Major Support Level (S3) sits at $21,645.

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 $22,818. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($23,177) and the 50-day EMA ($22,818) would support a breakout from R1 ($24,139) to target R2 ($24,531). However, a fall through S1 ($23,177) would give the bears a run at the 50-day EMA ($22,818) and S2 ($22,607). A fall through the 50-day EMA would send a bearish signal.