BTC Fear & Greed Index Reflects Ongoing Investor Contagion Fear

Key Insights:

• On Sunday, bitcoin (BTC) fell by 2.80%. Marking the seventh loss from eight sessions, BTC ended the day at $16,345.
• Investor angst over the FTX collapse and contagion fear continued to weigh.
• However, the Bitcoin Fear & Greed Index rose from 22/100 to 24/100, supported by BTC avoiding a fall to sub-$16,000.

On Sunday, bitcoin (BTC) fell by 2.80%. Following a 1.37% loss on Saturday, BTC ended the week down 21.9% to $16,345. Notably, BTC logged the seventh loss from eight sessions and ended the day at sub-$17,000 for the third time since 2020.

A bullish start to the day saw BTC rise to an early high of $16,956. Coming up short of the First Major Resistance Level (R1) at $17,068, BTC slid to a late low of $16,255. BTC fell through the First Major Support Level (S1) at $16,597 and the Second Major Support Level (S2) at $16,381 to end the day at $16,345.

FTX news updates continued to weigh. News of the FTX hack left BTC and the broader market in the red on Sunday. In the wake of BlockFi freezing withdrawals, contagion fear continues to grip the markets.

A lack of progress toward an FTX bailout has added to the bearish sentiment. Today, FTX-linked updates will remain the key driver. We expect further contagion signs to intensify selling pressure.

The FTX collapse and ripple effects will likely lead to a further decoupling from the NASDAQ Composite Index.

The Fear & Greed Index Rises to 24/100 Despite BTC Loss

Today, the Fear & Greed Index increased from 22/100 to 24/100. The increase came despite BTC seeing red for the seventh day from eight. However, the Index remains in the Extreme Fear zone despite a second consecutive rise,

While continuing to avoid sub-20, the Index tumbled to sub-10 in May following the collapse of Terra. However, any negative news linked to the FTX collapse and contagion could send the Index back to May levels, which would spell more trouble.

The Index would need to avoid sub-20/100 to support a return to 40 and a move into the neutral zone. However, a fall to sub-20/100 would see BTC face the risk of sub-$10,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 2.37% to $15,958. A bearish start to the day saw BTC fall from an early high of $16,406 to a low of $15,864.

BTC fell through the First Major Support Level (S1) at $16,081.

Technical Indicators

BTC needs to move through S1 and the $16,519 pivot to target the First Major Resistance Level (R1) at $16,782 and the Sunday high of $16,956. A return to $16,500 would signal a bullish session. However, the direction will hinge on updates on FTX and contagion news.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,220 and resistance at $17,500.

The Third Major Resistance Level (R3) sits at $17,921.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $15,818 in play. Barring another extended sell-off, BTC should avoid sub-$15,500. The Second Major Support Level (S2) at $15,818 should limit the downside. However, negative FTX-related news could bring sub-$15,000 into play.

The Third Major Support Level (S3) sits at $15,117.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $17,834. The 50-day EMA slid back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($16,782) would give the bulls a run at the 50-day EMA ($17,834). However, BTC would need news of an agreed bailout plan to break down resistance at R2 ($17,220) and $17,500. Failure to move through the 50-day EMA would leave BTC under pressure and S2 ($15,818) in view.