BTC Fear & Greed Index Falls to 31 as Investor Focus Shifts to the Fed

Key Insights:

• On Sunday, bitcoin (BTC) fell by 0.89%, ending the week up 5.42% to $20,647.
• Profit-taking ahead of this week’s Fed interest rate decision and the Fed Chair Powell press conference likely contributed to the session loss.
• The Bitcoin Fear & Greed Index fell from 34/100 to 31/100 in response to the bearish session.

On Sunday, bitcoin (BTC) fell by 0.89%. Partially reversing a 1.08% gain from Saturday, BTC ended the week up 5.42% to $20,647. Notably, BTC wrapped up the day at $20,000 for the sixth consecutive session while avoiding sub-$20,000 for the fifth day in a row.

After a mixed start to the day, BTC rose to a mid-morning high of $20,950. Falling short of the First Major Resistance Level (R1) at $21,091, BTC fell to a late low of $20,532. BTC briefly fell through the First Major Support Level (S1) at $20,576 before a partial recovery to $20,647.

A quiet session left investors to lock in profits ahead of a big week for the global financial markets. This Wednesday, the Fed delivers its interest rate decision. While the markets are betting on a 75-basis point rate hike, there is uncertainty over the Fed’s plans for December.

Hopes of a December Fed pivot supported the bullish week. However, investor angst could hit the markets ahead of the Wednesday decision. Crypto market sensitivity to US economic indicators and the Fed leaves the BTC correlation with the NASDAQ 100 in place.

This morning, the NASDAQ 100 Mini was down 56.75 points, leading BTC into the red.

The Fear & Greed Index Slips as Investors Get Cautions Ahead of the Fed

This morning, the Fear & Greed Index fell from 34/100 to 31/100. The pullback reflects investor anxiety ahead of Wednesday’s FOMC interest rate decision and press conference. However, affirmation of a December Fed pivot would support an Index return to the Neutral zone.

Near-term, US economic indicators will remain the focal point as investors await the Fed policy decision. Key stats include JOLTs job openings, ADP nonfarm employment, and ISM Manufacturing PMI numbers ahead of Wednesday’s decision.

The Index will need to target 40/100 and the neutral zone to support a BTC bearish trend reversal. A fall to sub-20/100 would signal a BTC slide to sub-$18,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.72% to $20,498. A bearish start to the day saw BTC fall from an early high of $20,691 to a low of $20,477.

Technical Indicators

BTC needs to move through the $20,710 pivot to target the First Major Resistance Level (R1) at $20,887 and the Sunday high of $20,950. A BTC return to $20,750 would signal a possible breakout session.

In the case of an extended rally, the Second Major Resistance Level (R2) at $21,128 and $21,500 would likely come into play. The Third Major Resistance Level (R3) sits at $21,546.

Failure to move through the pivot would leave the First Major Support Level (S1) at $20,469 in play. Barring an extended sell-off, BTC should avoid sub-$20,000. The Second Major Support Level (S2) at $20,292 should limit the downside.

The Third Major Support Level (S3) sits at $19,874.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 50-day EMA, currently at $20,282. The 50-day EMA widened from the 200-day EMA, with the 100-day EMA pulling away from the 200-day EMA to deliver bullish signals.

A hold above the 50-day EMA ($20,282) would support further upside and a return to $21,000. However, a fall through the 50-day EMA would bring sub-$20,000 and the 100-day EMA ($19,953) into view. The 200-day EMA sits at $19,814.