BTC Fear & Greed Index Nears the Fear Zone Signaling a Bearish BTC

Key Insights:

• It was a bearish Friday, with BTC sliding by 3.13% to end the day at $23,200.
• US inflation figures and hawkish Fed chatter sent the NASDAQ Composite Index and BTC into the red.
• The Fear & Greed Index responded to the threat of a more hawkish Fed policy outlook, falling from 53/100 to 52/100.

On Friday, bitcoin (BTC) slid by 3.13%. Following a 1.00% loss on Thursday, BTC ended the day at $23,200. The bearish session sent BTC to sub-$23,000 for the first time in nine sessions. BTC extended its losing streak to four sessions.

A bullish start to the day saw BTC rise to an early morning high of $24,150. Falling short of the First Major Resistance Level (R1) at $24,493, BTC slid to a late low of $22,873. BTC briefly fell through the First Major Support Level (S1) at $23,515 and briefly through the Second Major Support Level (S2) at $23,079 before ending the day at $23,200.

US Economic Indicators Reignite Fed Fear to Weigh on Buyer Appetite

On Friday, investors shifted focus from the increased regulatory scrutiny to the US economic calendar. US inflation, spending, and personal income numbers were in the spotlight.

Ahead of the Friday numbers, the latest round of US economic indicators had fueled bets of a more aggressive Fed interest rate trajectory to bring inflation to target. The Friday stats and Fed chatter aligned with market fears.

The Core PCE Price Index shattered hopes of the Fed making progress in taming inflation, rising by 4.7% year-over-year in January versus an upwardly revised 4.6% in December. Economists forecast a 4.3% increase.

Spending and personal income numbers also increased, adding to the bearish mood.

FOMC member chatter wrapped up the day, with Fed hawk Loretta Mester saying,

“It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%.”

The NASDAQ Composite Index responded to the stats and Loretta Mester, falling by 1.69%.

The Day Ahead

There are no external market forces to influence investor sentiment. However, investors will likely continue to digest the stats from the US and the likely Fed moves to bring inflation to target.

As investors grapple with the latest stats, US regulatory activity, and US lawmaker chatter will need continued monitoring. Investors should also track the crypto news wires for Binance and FTX updates, and SEC v Ripple news that could move the dial.

The BTC Fear & Greed Index Nears the Fear Zone Border

Today, the BTC Fear & Greed Index fell from 53/100 to 52/100. Significantly, the Index avoided a return to the Fear zone after a fall into the Neutral zone.

Fed Fear and the increasing regulatory scrutiny remain crypto headwinds that will continue to test investor sentiment.

After falling into the Neutral zone, the Index must return to the Greed zone to support a BTC breakout from $25,000 to target $30,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.08% to $23,181. A mixed start to the day saw BTC rise to an early high of $23,211 before falling into the red.

Technical Indicators

BTC needs to move through the $23,408 pivot to target the First Major Resistance Level (R1) at $23,942 and the Friday high of $24,150. A return to $24,000 would signal a breakout session. The crypto news wires should 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 $24,685 and resistance at $25,500. The Third Major Resistance Level (R3) sits at $25,962.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,665 in play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,131 should limit the downside.

The Third Major Support Level (S3) sits at $20,854.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 100-day EMA ($23,608). 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 the 100-day EMA ($23,608) would support a breakout from the 50-day EMA ($23,919) and R1 ($23,942) to target R2 ($24,685) and $25,000. However, a fall through the 200-day EMA ($22,841) and S1 ($22,665) would give the bears a run at S2 ($22,131). A move through the 50-day EMA ($23,919) would send a bullish signal.