BTC Fear & Greed Index Falls into Extreme Fear on Binance Withdrawal

Key Insights:

• On Wednesday, bitcoin (BTC) tumbled to its lowest level since November 2020 before a partial recovery to end the day at $15,923.
• News of Binance walking out of the FTX acquisition sent the crypto market into another tailspin, eroding investor confidence further.
• The Bitcoin Fear & Greed Index slid from 29/100 to 22/100, weighed by the BTC return to sub-$16,000.

On Wednesday, bitcoin (BTC) slid by 14.20%. Following a 9.95% decline from Tuesday, BTC ended the day at $15,923. Notably, BTC extended its losing streak to four sessions and ended the day at sub-$16,000 for the first time since November 15, 2020.

Bearish throughout the day, BTC slid from an early high of $18,600 to a late low of $15,588. The extended sell-off to a new 2022 low saw BTC fall through the First Major Support Level (S1) at $16,769 to end the day at $15,923.

Market angst over the FTX liquidity crunch, contagion fear, and the threat of increased regulatory scrutiny weighed on BTC and the broader market before the news broke of Binance pulling the plug on the acquisition.

The market reaction to the collapse of FTX and the increased threat of bankruptcy led to a further decoupling from the NASDAQ Composite Index. On Wednesday, the NASDAQ fell by a more modest 2.48%, with the mid-terms testing risk appetite.

The Fear & Greed Index Slides to 22/100 on BTC Return to Sub-$16,000

This morning, the Fear & Greed Index slid from 29/100 to 22/100. Another BTC sell-off led the Index back into the Extreme Fear zone.

Following the FTX liquidity crunch, the news of Binance pulling out of the acquisition rocked investor confidence. FTX faces bankruptcy if it can’t plug a reported $8 billion hole.

As one of the leading exchanges, the ramifications will be significant and likely leave investor confidence at a low for an extended time. The FTX story will remain the market focal point near term.

The Index would need to avoid sub-20/100 to support a return to 40 and a move into the neutral zone. However, a fall to sub-20/100 would see BTC face the risk of sub-$10,000. The decline from 40 on November 6 suggests more downside for BTC, barring an FTX bailout.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 2.32% to $16,292. A mixed start to the day saw BTC fall to an early low of $15,760 before rising to a high of $16,326.

Technical Indicators

BTC needs to move through the $16,704 pivot to target the First Major Resistance Level (R1) at $17,819 and the Wednesday high of $18,600. A return to $18,000 would signal a bullish session. However, the direction will hinge on updates on FTX and any signs of contagion.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $19,716 and resistance at $20,000.

The Third Major Resistance Level (R3) sits at $22,728.

Failure to move through the pivot would leave the First Major Support Level (S1) at $14,807 in play. Barring another extended sell-off, BTC should avoid sub-$14,000 and the Second Major Support Level (S2) at $13,692.

The Third Major Support Level (S3) sits at $10,680.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $19,647. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA converging on the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($17,819) would give the bulls a run at the 50-day EMA ($19,647) and R2 ($19,716). However, failure to move through the 50-day EMA ($19,647) would leave BTC under pressure and bring S1 ($14,807) into view. A bearish cross of the 100-day EMA through the 200-day EMA would test buyer appetite.