BTC Fear & Greed Index Falls into Extreme Fear on NASDAQ Loss

Key Insights:

• On Monday, bitcoin (BTC) fell by 0.89%. Partially reversing a 1.41% gain from Sunday, BTC ended the day at sub-$17,000 for the third time in six sessions.
• US economic indicators and the NASDAQ Composite Index sent BTC into negative territory for the session.
• The Fear & Greed Index responded to the latest US stats, falling back into the Extreme Fear zone.

On Monday, bitcoin (BTC) fell by 0.89%. Partially reversing a 1.41% gain from Sunday, BTC ended the day at $16,975. The bearish session saw BTC end the day at sub-$17,000 for the third time in six sessions.

A bullish morning saw BTC rally to a mid-morning high of $17,436 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $17,263 and the Second Major Resistance Level (R2) at $17,399.

However, the reversal saw BTC fall to a late low of $16,886. BTC briefly fell through the First Major Support Level (S1) at $16,938 before ending the day at $16,975.

External Market Forces Deliver Mixed BTC Investor Sentiment

News of China easing COVID-19 lockdown measures delivered early crypto support. However, US economic indicators and the NASDAQ Composite Index weighed in the afternoon session.

Better-than-expected ISM Non-Manufacturing PMI numbers questioned the Fed pivot theory. The latest numbers also removed immediate fear of a US economic recession.

In November, the ISM Non-Manufacturing PMI rose from 54.4 to 56.5 versus a forecasted fall to 53.3.

Sub-components were also positive. The Employment Index increased from 49.1 to 51.5, with the Prices Index slipping from 70.7 to 70.0. In terms of demand, the New Orders Index declined from 56.6 to 56.0.

Following Friday’s US Jobs Report, Monday’s ISM Non-Manufacturing survey could give the FOMC hawks more voice at the December meeting. However, there are no FOMC members speaking to influence sentiment toward Fed monetary policy. The Fed entered the blackout period on Sunday.

Today, the US economic calendar is on the lighter side, with trade data and the Redbook in focus. However, we don’t expect a market reaction to the numbers, leaving investors to consider the recent string of stats that could force the Fed into another 75-basis point interest rate hike.

This morning, the NASDAQ mini was up 21.75 points.

The Fear & Greed Index Falls into the Extreme Fear Zone

Today, the BTC Fear & Greed Index slipped from 26/100 to 25/100. Significantly, the Index returned to the Extreme Fear zone. The latest set of US economic indicators has raised the prospects of another hawkish Fed policy move, weighing on investor sentiment.

Investors will have to wait for the November US CPI report to be better placed to second guess the Fed’s next move. We expect some market volatility, however. The influence of the Fed on the crypto market has been evident throughout the year.

Despite the return to the Extreme Fear zone, hopes of a bottoming out have limited the downside, with the Index continuing to avoid sub-20/100.

Near-term, 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 0.48% to $17,056. A bullish start to the day saw BTC rise from an early low of $16,974 to a high of $17,109.

Technical Indicators

BTC needs to move through the $17,099 pivot to target the First Major Resistance Level (R1) at $17,312 and the Monday high of $17,436. A move through the morning high of $17,109 would signal a bullish session. However, the crypto news wires should be market-friendly to support a breakout session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,649 and resistance at $18,000. The Third Major Resistance Level (R3) sits at $18,199.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,762 in play. Barring an extended sell-off, BTC should avoid sub-$16,500. The Second Major Support Level (S2) at $16,549 should limit the downside. The Third Major Support Level (S3) sits at $15,999.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. This morning, bitcoin sat above the 100-day EMA, currently at $16,920. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through R1 ($17,312) would support a breakout from the 200-day EMA ($17,393) to bring R2 ($17,649) into play. However, a fall through the 100-day EMA ($16,920) and the 50-day EMA ($16,908) would bring S1 ($16,762) into view. A fall through the 50-day EMA would signal an extended sell-off.