BTC Fear & Greed Index Inches Higher Despite a NASDAQ Index Loss

Key Insights:

• On Wednesday, bitcoin (BTC) rose by 0.16% to end the day at $17,813. Notably, BTC revisited $18,000 for the second time since November 10.
• Binance news took a back seat for a second session, with a hawkish Fed rate hike weighing on the NASDAQ Index and cryptos.
• The Fear & Greed Index rose from 30/100 to 31/100 in response to the bullish BTC session.

On Wednesday, bitcoin (BTC) rose by 0.16%. Following a 3.23% rally on Tuesday, BTC ended the day at $17,813. Notably, BTC revisited $18,000 for the second time since November 10 while avoiding sub-$17,000.

Bullish through the morning and early afternoon, BTC rallied to a late afternoon high of $18,391. BTC broke through the First Major Resistance Level (R1) at $18,156 before hitting reverse. The reversal saw BTC slide to a low of $17,678. However, steering clear of the First Major Support Level (S1) at $17,258, BTC bounced back to end the day in positive territory.

A Hawkish Fed Sends the NASDAQ Index and BTC into the Red

Following Tuesday’s US CPI Report, the Fed dashed hopes of a less aggressive rate path to bring inflation to target.

On Wednesday, the Fed raised interest rates by 50 basis points, in line with market expectations. However, the Fed upwardly revised its interest rate projections while downwardly revising economic growth projections.

The more aggressive interest rate path and economic growth projections sent BTC and riskier assets into the red.

In response to the Fed, the NASDAQ Index fell by 0.76%, with the S&P500 ending the day with a loss of 0.61%.

Today, the focus will shift to the US economic calendar and FOMC member chatter. The weekly jobless claims, Philly Fed Manufacturing PMI, and retail sales figures will likely have the most influence.

Following the Fed’s interest rate decision on Wednesday, an unexpected spike in jobless claims, a slump in retail sales, and a deeper contraction in manufacturing sector activity would test the appetite for riskier assets.

This morning, the NASDAQ mini was down 4 points.

The Fear & Greed Index Rises to 31/100 on Bullish BTC session

Today, the BTC Fear & Greed Index rose from 30/100 to 31/100. Significantly, the Index avoided a reversal in response to the Fed. BTC revisited $18,000 for the second time since November 10 and extended its winning streak to three sessions.

The upside came despite increased lawmaker scrutiny. The Senate Banking Committee held the hearing to discuss the demise of FTX. A common theme was the call for stringent regulations, with some lawmakers calling to ban cryptos in the US.

As the dust settles from the FTX collapse, suggestions of a Binance liquidity crunch would weigh heavily on the Index. Regulatory risk will be another focal point for investors, however.

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 down 1.00% to $17,635. A mixed start to the day saw BTC rise to an early high of $17,867 before falling to a low of $17,633.

Weak economic indicators from China weighed on investor sentiment. Industrial production, fixed asset investment, and retail sales figures reignited recessionary fears. However, the recent easing of COVID-19 lockdown measures limited the damage.

Technical Indicators

BTC needs to move through the $17,961 pivot to target the First Major Resistance Level (R1) at $18,243 and the Wednesday high of $18,391. A BTC return to $18,000 would signal a bullish session.

In the event of an extended rally, BTC would likely break out from the Second Major Resistance Level (R2) at $18,674 to bring $19,000 into view. The Third Major Resistance Level (R3) sits at $19,387.

Failure to move through the pivot would leave the First Major Support Level (S1) at $17,530 in play. Barring an extended sell-off, BTC should avoid sub-$17,000. The Second Major Support Level (S2) at $17,248 should limit the downside. The Third Major Support Level (S3) sits at $16,535.

An adverse crypto market event would bring sub-$17,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, BTC sat above the 200-day EMA, currently at $17,334. The 50-day EMA converged on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 200-day EMA would support a breakout from R1 ($18,243) to target R2 ($18,674) and $19,000. However, a fall through S1 ($17,530) and the 200-day ($17,334) and 50-day ($17,318) EMAs would bring S2 ($17,248) and sub-$17,000 into play. A fall through the 50-day EMA would signal a possible BTC return to sub-$17,000.