BTC Fear & Greed Index Remain Greedy Despite Stronger Headwinds

Key Insights:

• It was a bearish Tuesday, with BTC falling by 1.49% to end the day at $24,466.
• After the quiet Monday session, Fed Fear resurfaced, sinking the NASDAQ Composite Index and the broader crypto market.
• Despite the bearish session, the Fear & Greed Index remained within the Greed zone, falling from 60/100 to 59/100.

On Tuesday, bitcoin (BTC) fell by 1.49%. Partially reversing a 2.27% rally from Monday, BTC ended the day at $24,466. Despite the bearish session, BTC revisited the $25,000 handle for the fifth time in six sessions while avoiding sub-$24,000.

A bullish start to the day saw BTC rise to a mid-morning high of $25,227. However, falling short of the First Major Resistance Level (R1) at $25,345, BTC slid to a late low of $24,172. BTC briefly fell through the First Major Support Level (S1) at $24,093 before ending the day at $24,466.

Fed Fear Overshadows Optimism Toward the US Economic Outlook

After the Monday holiday, the US markets sent BTC and the broader crypto market into negative territory.

Better than expected private sector PMI numbers fueled Fed Fear, with investors betting on the Fed pushing rates higher for longer to bring inflation to target. In February, the US services PMI jumped from 46.8 to 50.5 versus a forecasted rise to 47.2.

With the services sector accounting for more than two-thirds of the US economy, the latest numbers give the Fed reason to take a more aggressive Fed rate path to bring inflation to target.

The stats and investor sentiment toward Fed monetary policy left the NASDAQ Composite Index down 2.50%, its worst session of 2023. Things were not much better for the Dow and the S&P 500, which saw losses of 2.06% and 2.00%, respectively.

Crypto news drew interest but failed to move the dial.

News of Polygon Network laying off staff was bearish, while plans to offer crypto trading to retail customers in HK and FTX Japan resuming withdrawals were market positives. However, Coinbase (COIN) quarterly earnings highlighted the effects of the long-lasting crypto winter and reminded the markets of the long road ahead amidst increased regulatory scrutiny.

The Day Ahead

It is another busier day, with the FOMC meeting minutes and FOMC member chatter to influence the NASDAQ Index and the crypto market. Following the Fed-fueled Tuesday sell-off, a more hawkish-than-expected Fed would test buyer appetite. FOMC member Williams could also move the dial later in the day.

This morning the NASDAQ mini was down 20.25 points, signaling a bearish start to the US session.

However, US regulatory activity and US lawmaker chatter will need monitoring. Investors should also track the crypto news wires for Binance, FTX, and Silvergate Bank updates that could move the dial.

The Fear & Greed Index Stays Greedy Despite a Bearish BTC

Today, the BTC Fear & Greed Index slipped from 60/100 to 59/100. However, the Index remained within the Greed zone despite the bearish BTC session, suggesting regulatory resilience amidst increasing regulatory scrutiny and Fed Fear.

With the markets expecting a more aggressive Fed interest rate trajectory, today’s FOMC meeting minutes could affirm the Fed outlook, which would test investor sentiment. However, US economic indicators continue to paint a rosier US macroeconomic environment, which should limit the impact.

After returning to the Greed zone, the Index must avoid the Neutral 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 up 0.01% to $24,468. A range-bound start to the day saw BTC rise to an early high of $24,485 before falling to a low of $24,435.

Technical Indicators

BTC needs to move through the $24,622 pivot to target the First Major Resistance Level (R1) at $25,071 and the Tuesday high of $25,227. A return to $25,000 would signal a breakout session. The crypto news wires and Fed minutes 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 $25,677 and resistance at $26,000. The Third Major Resistance Level (R3) sits at $26,732.

Failure to move through the pivot would leave the First Major Support Level (S1) at $24,016 in play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$23,500. The Second Major Support Level (S2) at $23,567 should limit the downside.

The Third Major Support Level (S3) sits at $22,523.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($24,076). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($24,076) would support a breakout from R1 ($25,071) to target R2 ($25,677) and $26,000. However, a fall through the 50-day EMA ($24,076) and S1 ($24,016) would give the bears a run at S2 ($23,567) and the 100-day EMA ($23,525). A fall through the 50-day EMA ($24,076) would send a bearish signal.