BTC Fear & Greed Index Remains in Extreme Fear as FTX Talks Continue

Key Insights:

• On Thursday, bitcoin (BTC) jumped by 10.44% to end the day at $17,585.
• News of Justin Sun working on an FTX bailout and the US CPI report delivered investor relief.
• The Bitcoin Fear & Greed Index rose from 22/100 to 25/100, supported by the BTC revisiting to $18,000.

On Thursday, bitcoin (BTC) rallied by 10.44%. Partially reversing a 14.20% slide from Wednesday, BTC ended the day at $17,585. Notably, BTC ended a four-day losing streak while failing to hold onto the $18,000 handle.

A mixed start to the day saw BTC fall to an early low of $15,760. Steering clear of the First Major Support Level (S1) at $14,807, BTC rallied to a late high of $18,156. BTC broke through the First Major Resistance Level (R1) at $17,819 before falling back to end the day at $17,585.

News of Tron’s Justin Sun working on an FTX bailout plan provided support from the early part of the session. However, the US CPI report led BTC to $18,000 before easing back. The US CPI report for October drove bets of a December Fed pivot.

BTC rose from $16,628 to $17,796 within the first 30-minutes of the US CPI report.

The US annual inflation rate softened from 8.2% to 7.7% in October. The markets responded strongly to the numbers. This morning, the probability of a December 75-basis point rate hike stood at 17.0% versus 48.0% one week ago.

On Thursday, the NASDAQ surged by 7.35% in response to the stats. This morning, the NASDAQ mini was up 19.5 points.

For the day ahead, the crypto market focus will remain on FTX and progress toward a bailout. Failure would lead the crypto market into another tailspin. From the US, consumer sentiment figures and FOMC member chatter will need consideration.

Investors need to track regulatory comments and government plans to impose a rigid regulatory framework.

The Fear & Greed Index Rises to 25/100 but Remains in Extreme Fear

Today, the Fear & Greed Index increased from 22/100 to 25/100. Despite the increase, the Index remained within the Extreme Fear zone, reflecting investor anxiety over the FTX bailout.

While hopes of an FTX bailout and the US CPI report supported a BTC return to $18,000, downside risks remain. Justin Sun and other players could come up short of a solution. Failure would force the markets to swallow an FTX bankruptcy.

Today, the FTX story will remain the key driver, with progress toward a bailout being crypto and Index positive.

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 0.31% to $17,530. A mixed start to the day saw BTC rise to an early high of $17,640 before falling to a low of $17,393.

Technical Indicators

BTC needs to avoid the $17,167 pivot to target the First Major Resistance Level (R1) at $18,574. A move through the Thursday high of $18,156 would signal a bullish session. However, the direction will hinge on updates on FTX and signs of contagion.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $19,563 and resistance at $20,000.

The Third Major Resistance Level (R3) sits at $21,959.

A fall through the pivot would bring the First Major Support Level (S1) at $16,178 into play. Barring another extended sell-off, BTC should avoid sub-$16,000 and the Second Major Support Level (S2) at $14,771. However, news of Justin Sun walking away from bailout talks could send BTC to sub-$15,000.

The Third Major Support Level (S3) sits at $12,375.

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 $19,134. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($18,574) would give the bulls a run at the 50-day EMA ($19,134) and R2 ($19,716). However, failure to move through R1 ($18,574) and the 50-day EMA ($19,134) would leave BTC under pressure and leave S1 ($16,167) into view.