BTC Fear & Greed Index Returns to Neutral Signaling a $22,000 Visit

Key Insights:

• It was a bullish Monday, with BTC rising by 1.51% to end the day at $21,197.
• Investor focus returned to FTX contagion and Fed monetary policy, supporting a resumption of the upward swing toward $25,000.
• The Fear & Greed Index rose from 45/100 to 51/100, supported by a BTC hold onto the $21,000 handle.

On Monday, bitcoin (BTC) rose by 1.51%. Reversing a 0.40% decline from Sunday, BTC ended the day at $21,197. Notably, BTC held onto the $21,000 handle for the first time since November 5.

A bullish start to the day saw BTC rise to an early high of $21,445 before hitting reverse. BTC broke through R1 ($21,103) and R2 ($21,323) before sliding to a mid-afternoon low of $20,639. Avoiding S1 ($20,614), BTC broke through R1 and R2 to strike a day high of $21,469 before easing back through R2 to end the session at $21,197.

Easing FTX Contagion and Fed Policy Sentiment Delivered Support

After a Sunday pause, the BTC bulls were back in control on Monday. Sentiment towards FTX contagion and Fed monetary policy delivered a bullish BTC session.

BTC and the broader market have reversed the FTX-fueled losses from November. Following last week’s news from FTX lawyers of $5 billion in cash & cash equivalents and $4.6 billion in nonstrategic assets, FTX contagion fear has eased. The figures suggest that FTX can make creditors whole, removing the threat of more FTX-linked bankruptcies.

However, BTC remains well below its November 2021 all-time high of $68,958. Regulatory risk will remain a crypto market headwind for the foreseeable future. SEC regulation by enforcement and a likely shift in the regulatory landscape leaves investors facing regulatory uncertainty, with some lawmakers calling for a crypto ban in the wake of the FTX collapse.

Near-term, the SEC v Ripple case could begin to influence BTC and the broader crypto market. While the SEC views BTC as a commodity, the impact of an SEC victory would be far-reaching. However, investors are optimistic about a favorable outcome, supporting a recent XRP return to $0.40.

Today, US economic indicators and corporate earnings will provide direction to the NASDAQ Index and BTC. Positive economic indicators and market-friendly Goldman Sachs (GS) and Morgan Stanley (MS) earnings would deliver a bullish afternoon session. Investors should also monitor FOMC member chatter.

This morning, the NASDAQ Mini was down 41 points, weighing on BTC and the broader crypto market.

The Fear & Greed Index Returns to the Neutral Zone

Today, the BTC Fear & Greed Index rose from 45/100 to 51/100. Significantly, the Index returned to the Neutral zone for the second time in three sessions and the second time since August 14, 2022.

A bullish Monday session led to the return to the Neutral zone. Easing FTX contagion risk and hopes of a soft landing in the US remain tailwinds.

The Index would need to move back through the Sunday high of 52/100 to retarget the Greed zone. A return to the Greed zone would support the BTC move to $25,000. The Index last visited the Greed zone in March 2022.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.74% to $21,040. A mixed start to the day saw BTC rise to an early high of $21,310 before falling to a low of $20,853.

Technical Indicators

BTC needs to move through the $21,102 pivot to target the First Major Resistance Level (R1) at $21,564. A move through the Monday high of $21,469 would support another bullish session. However, the crypto news wires should be market-friendly to deliver another breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $21,932 and resistance at $22,000. The Third Major Resistance Level (R3) sits at $22,762.

Failure to move through the pivot would leave the First Major Support Level (S1) at $20,734 in play. Barring a crypto event-fueled sell-off, BTC should avoid sub-$20,000. The Second Major Support Level (S2) at $20,272 should limit the downside. The Third Major Support Level (S3) sits at $19,442.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $19,476. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($19,476) would support a breakout from R1 ($21,564) to target R2 ($21,932) and $22,000. However, a fall through S1 ($20,734) and S2 ($20,272) would give the bears a run at the 50-day EMA ($19,476). A fall through the 50-day EMA would signal a shift in sentiment.