BTC Fear & Greed Index Jumps to 33 Signaling a BTC Return to $25,000

Key Insights:

• On Tuesday, bitcoin (BTC) rallied by 3.95% to end the day at $20,000 for the first time since October 5.
• US economic indicators supported the recent talk of a possible Fed pivot, driving demand for riskier assets.
• The Bitcoin Fear & Greed Index exited the Extreme Fear zone with a surge from 20/100 to 33/100.

On Tuesday, bitcoin (BTC) rallied by 3.95%. Reversing a 1.25% fall from Monday, BTC ended the day at $20,104. Notably, BTC wrapped up the day at $20,000 for the first time since October 5 while also avoiding sub-$19,000 for a fourth session.

A bearish morning saw BTC fall to a late morning low of $19,251. However, steering clear of the First Major Support Level (S1) at $19,138, BTC surged to a late afternoon high of $20,432. BTC broke through the Major Resistance Levels. However, a late pullback saw BTC fall through the Third Major Resistance Level (R3) at $20,258.

US economic indicators delivered the afternoon breakout session. Weak stats eased bets of a hawkish Fed move in December.

In August, the S&P/CS HPI Composite 20 n.s.a increased by 13.1% year-over-year, down from 16.0% in July. A surge in mortgage rates stemming from Fed rate hikes has adversely affected the housing market.

A sharp fall in US consumer confidence provided further support. In October, the CB Consumer Confidence Index slid from 107.8 to 102.5.

Following the Friday Wall Street Journal Report on Fed members considering easing the pace of rate hikes, US economic indicators have also signaled the effectiveness of the Fed’s policy moves. The string of weak stats may force the Fed to consider smaller rate hikes to avoid a hard landing.

This morning, the FedWatch Tool had the probability of November and December rate hikes at 93.7% and 49.5%, respectively. One week ago, the likelihood of a 75-basis point hike in December stood at 64.3%.

In response to the shift in sentiment, the NASDAQ 100 rallied 2.25%. However, post-closing bell earnings have left the NASDAQ 100 Mini down 254 points this morning.

For the day ahead, US housing sector numbers could deliver further support. Economists forecast new home sales to slide 13.9% in September. In August, new home sales had jumped by 28.8%.

The Fear & Greed Index Jumps to 33/100, Signaling a BTC Return to $25,000

This morning, the Fear & Greed Index surged from 20/100 to 33/100. Notably, the Index moved out of the Extreme Fear zone for the first time since October 6, when the Index rose to 26/100.

A shift in sentiment toward Fed monetary policy eased investor fears. While the markets continue pricing in a 75-basis point rate hike in November, bets for December are less hawkish.

The Index will need to target 40/100 and the neutral zone to support a BTC bearish trend reversal. However, 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 up 0.33% to $20,171. A mixed start to the day saw BTC fall to an early low of $20,077 before rising to a high of $20,213.

Technical Indicators

BTC needs to avoid the $19,929 pivot to target the First Major Resistance Level (R1) at $20,607. A BTC move through the Tuesday high of $20,432 and a return to $20,500 would signal another breakout session.

In the case of an extended rally, the Second Major Resistance Level (R2) at $21,110 would likely come into play. The Third Major Resistance Level (R3) sits at $22,291.

A fall through the pivot would bring the First Major Support Level (S1) at $19,426 into play. Barring an extended sell-off, BTC should avoid sub-$19,000 and the Second Major Support Level (S2) at $18,748.

The Third Major Support Level (S3) sits at $17,567.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 200-day EMA, currently at $19,521.

The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA to deliver bullish signals.

A BTC hold above the 200-day EMA would support a run at R1 ($20,607) to bring $21,000 into view. However, a fall through the 200-day EMA ($19,521) would bring S1 ($19,426), the 50-day EMA ($19,402), and the 100-day EMA ($19,377) into view.