BTC Fear & Greed Index Nears the Fear Zone on Kraken News

Key Insights:

• It was a bearish Thursday, with BTC sliding by 5.04% to end the day at $21,800.
• News of Kraken settling with the SEC and ceasing US crypto staking services sent BTC crashing to sub-$22,000 for the first time since January 19.
• The Fear & Greed Index returned to the Neutral zone, falling from 55/100 to 48/100.

On Thursday, bitcoin (BTC) slid by 5.04%. Following a 1.24% loss on Wednesday, BTC ended the day at $21,800. BTC wrapped up the day at sub-$22,000 for the first time since January 19.

A bullish start to the day saw BTC rise to an early high of $23,003. Coming up short of the First Major Resistance Level (R1) at $23,361, BTC tumbled to a late low of $21,700. BTC fell through the First Major Support Level (S1) at $22,622 and the Second Major Support Level (S2) at $22,287 to end the day at $21,800.

SEC Sinks BTC and the Broader Crypto Market on Kraken News

On Thursday, US economic indicators drew interest early in the afternoon session. A rise in initial jobless claims from 183k to 196k provided support.

However, the support was brief, with the NASDAQ Index hitting reverse in response to a weak bond auction and corporate earnings. The NASDAQ Index fell by 1.02%, with investor sentiment toward recent Fed chatter adding to the bearish mood.

While the NASDAQ contributed to the BTC loss, news of Kraken settling with the SEC and ceasing US crypto staking services sent BTC to sub-$22,000.

With Kraken agreeing to cease staking services to US customers, other exchanges could suffer a similar fate that would materially impact crypto market activity and price action. On Thursday, Coinbase (COIN) shares tumbled 14.13% to end the day at $59.63.

Rumors of the SEC planning to ban crypto staking had hit the crypto news wires overnight on Wednesday. We expect news of other crypto exchanges suffering a similar fate to deliver further losses.

Today, Michigan Consumer Sentiment figures will be in the spotlight. While the headline number will influence, investors should consider the sub-components, including the Inflation Expectations Index.

Investors need to also monitor FOMC member chatter, with hawkish commentary likely to weigh on riskier assets. Christopher Waller will speak today.

However, investors should continue monitoring the crypto news wires for FTX, Genesis, and Silvergate Bank updates. Regulatory chatter and SEC v Ripple news will also provide direction.

The Fear & Greed Index Slides to Neutral on BTC Return to Sub-$22,000 Levels

Today, the BTC Fear & Greed Index returned to Neutral, falling from 55/100 to 48/100. Investor reaction to the Kraken news and increased regulatory uncertainty left the Index on the border of the Fear zone.

Following the collapse of FTX, the White House Administration’s call for greater regulatory oversight raised the threat of such SEC action. With the SEC regulating by enforcement, lawmakers need to step forward and introduce a regulatory framework to provide the market with clear rules and regulations.

A market-friendly outcome to the ongoing SEC v Ripple could incentivize US lawmakers to deliver a much-needed framework.

After returning to the Neutral zone, the Index must avoid the Fear zone to support a BTC run at $23,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.23% to $21,850. A mixed start to the day saw BTC fall to an early low of $21,764 before rising to a high of $21,884.

Technical Indicators

BTC needs to move through the $22,167 pivot to target the First Major Resistance Level (R1) at $22,635 and the Thursday high of $23,003. A return to $22,000 would signal a breakout session. However, the crypto news wires and US stats will need to be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $24,471. The Third Major Resistance Level sits at $24,774.

Failure to move through the pivot would leave the First Major Support Level (S1) at $21,332 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$21,000 and the Second Major Support Level (S2) at $20,865. The Third Major Support Level (S3) sits at $19,562.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat above the 200-day EMA ($21,701). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through R1 ($22,635) would support a breakout from the 100-day ($22,710) and 50-day ($22,908) EMAs to bring R2 ($24,471) into play. However, a fall through the 200-day EMA ($21,701) would bring S1 ($21,332) into view. A move through the 50-day EMA would send a bullish signal.