BTC Fear & Greed Index Falls on US Inflation Numbers and Fed Fear

Key Insights:

• On Friday, bitcoin (BTC) ended a mini two-day winning streak with an 0.81% loss to end the quarter at $19,430.
• In a choppy end to the quarter, a pickup in US inflationary pressure weighed while a downward revision to consumer sentiment limited the damage.
• However, the Bitcoin Fear & Greed Index slipped from 21/100 to 20/100.

On Friday, bitcoin (BTC) fell by 0.81%. Reversing a 0.88% gain from Thursday, BTC ended the month down 1.99% to $19,430. It was a third quarter to forget for the BTC bulls, with a 37.25% tumble in July leaving BTC down 38.9% for the quarter. In the previous quarter, BTC slumped by 53.84%.

A choppy start to the Friday session saw BTC fall to an early low of $19,154. Steering clear of the First Major Support Level (S1) at $19,081, BTC rallied to a mid-afternoon high of $20,181. BTC broke through the First Major Resistance Level (R1) at $19,874 and the Second Major Resistance Level (R2) at $20,160.

Late in the session, however, BTC tracked the NASDAQ 100 into the red.

Fed and Recession Fears Leave the NASDAQ and BTC in the Red

On Friday, the NASDAQ 100 fell by 1.51% to end the quarter down 4.11%. Fed fear resurfaced at the end of the week, with US inflationary pressures picking up in August. The Core PCE Price Index increased by 4.9%, up from 4.7% in July.

Softer consumer sentiment figures for September provided brief relief before BTC and the NASDAQ reversed session gains. In September, the Michigan Consumer Sentiment Index rose from 58.2 to 58.6, down from a prelim 59.5.

Fed Fear and market jitters over a recession led the NASDAQ 100 to a third consecutive quarterly loss, the longest losing streak since the Global Financial Crisis. The correlation between BTC and the NASDAQ was evident throughout the three quarters of the year. However, BTC fell for the fourth consecutive quarter.

Bitcoin Fear & Greed Index Avoids Sub-20 Despite a Bearish Session

Today, the Fear & Greed Index fell from 21/100 to 20/100. A bearish session, fueled by inflation and Fed fear led to the decline. The Index sits deep within the Extreme Fear zone, reflecting investor sentiment towards the Fed and the economic outlook.

In recent weeks, avoiding sub-20/100 has been the key. The bears will be eying a fall to sub-20/100 to signal a BTC slide to sub-$18,000. By contrast, the bulls will look for an Index return to 40/100 to support a move toward $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.28% to $19,375. A range-bound start to the day saw BTC rise to an early high of $19,485 before falling to a low of $19,374.

Technical Indicators

BTC needs to move through the $19,588 pivot to target the First Major Resistance Level (R1) at $20,023 and the Friday high of $20,181. A BTC move through the Friday would signal a bullish session.

In the case of another extended rally, BTC should test the Second Major Resistance Level (R2) at $20,615 and resistance at $21,000. The Third Major Resistance Level (R3) sits at $21,642.

Failure to move through the pivot would leave the First Major Support Level (S1) at $18,996 in play. Barring an extended sell-off, BTC should avoid sub-$18,500. The Second Major Support Level (S2) at $18,561 will likely limit the downside.

The Third Major Support Level (S3) sits at $17,534.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat at the 50-day EMA, currently at $19,372.

The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA flattened on the 200-day EMA, delivering mixed price signals.

A move through the 100-day ($19,530) EMA would give the bulls a run at the 200-day EMA ($20,005) and R1 ($20,023). However, a slide through the 50-day EMA ($19,372) would give the bears a run at S1 ($18,996).