BTC Fear & Greed Index Reacts to the US CPI Report and the NASDAQ

Key Insights:

• On Tuesday, bitcoin (BTC) rallied by 3.23% to end the day at $17,785. Notably, BTC revisited $18,000 for the first time since November 10.
• Binance news took a back seat, with the US CPI Report driving demand for riskier assets.
• The Fear & Greed Index rose from 27/100 to 30/100 in response to the BTC return to $18,000.

On Tuesday, bitcoin (BTC) rallied by 3.23%. Following a 0.70% gain on Monday, BTC ended the day at $17,785. Notably, BTC revisited $18,000 for the first time since November 10 while avoiding sub-$17,000.

A bearish start to the day saw BTC fall to a mid-morning low of $17,102. Steering clear of the First Major Support Level (S1) at $16,984, BTC rallied to an early afternoon high of $18,000. BTC broke through the Major Resistance Levels before a pullback to sub-$17,700.

The pullback saw BTC fall through the Third Major Resistance Level (R3) at $17,892 to end the day at $17,785.

The US CPI Report and the NASDAQ Index Deliver BTC Support

The heavily anticipated US CPI Report drove demand for riskier assets on Tuesday. Softer-than-expected inflation figures fueled bets of a December Fed pivot and a less aggressive interest rate trajectory.

In November, the US annual inflation rate softened from 7.7% to 7.1% versus forecasts of a fall to 7.3%. In response to the numbers, the probability of a 75-basis point rate hike fell to just 17.0%, down from 26.5% on Monday.

The increasing bets of a December Fed pivot supported the NASDAQ Index and the S&P500, which saw gains of 1.01% and 0.73%, respectively. Sub-7% may have provided stronger gains and raised bets of a near-term pause on interest rate hikes.

Investors Brush Aside Binance News Ahead of the Fed

Binance news took a backseat on Tuesday despite the reports of US authorities planning to charge Binance with financial crimes. Sentiment toward the Binance news and in response to the latest reserves reports reportedly led to a surge in withdrawals, raising liquidity concerns.

However, the markets brushed this aside. Binance CEO CZ took to Twitter, saying,

“We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us. I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating platform.”

CZ added,

“It costs some network fees to run these “tests”. But keeps the industry healthy. Exchange business is simple.”

Federal Reserve and Fed Chair Powell to Take the Spotlight

Today, the focus shifts to the Federal Reserve and the final interest rate decision of the year. With investors expecting a 50-basis point rate hike, the FOMC economic projections and the Fed Chair Powell press conference will likely have more influence.

A less hawkish outlook on interest rates, downward revisions to inflation forecasts, and a soft landing would provide BTC and broader crypto market support.

This morning, the NASDAQ mini was down 4 points.

The Fear & Greed Index Jumps on BTC Return to $18,000

Today, the BTC Fear & Greed Index rose from 27/100 to 30/100. Significantly, the Index reflected investor sentiment toward the latest news on Binance while responding to the US CPI Report and the NASDAQ Index.

In response to the softer-than-expected US CPI Report, BTC revisited $18,000. Bets of a less aggressive interest rate trajectory supported the BTC return to $18,000 and the Index return to 30/100.

However, today’s Fed interest rate decision, FOMC economic projections, and the Fed Chair Powell press conference will dictate near-term trends.

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 up 0.16% to $17,814. A mixed start to the day saw BTC rise to an early high of $17,852 before falling to a low of $17,762.

Technical Indicators

BTC needs to avoid the $17,629 pivot to target the First Major Resistance Level (R1) at $18,156. 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 $18,527 to bring $19,000 into view. The Third Major Resistance Level (R3) sits at $19,425.

A fall through the pivot would bring the First Major Support Level (S1) at $17,258 into play. Barring an extended sell-off, BTC should avoid sub-$17,000 and the Second Major Support Level (S2) at $16,731. The Third Major Support Level (S3) sits at $15,833.

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 $17,303. The 50-day EMA closed in 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 ($18,156) to target R2 ($18,527) and $19,000. However, a fall through the 200-day EMA ($17,303) would bring S1 ($17,258) and the 50-day EMA ($17,182) into play. A fall through the 50-day EMA would signal a possible BTC reversal.