BTC Fear & Greed Index Returns to the Fear Zone on Fed Pivot Bets

Key Insights:

• On Thursday, bitcoin (BTC) rallied by 2.37%. Reversing a 1.45% slide from Wednesday, BTC ended the day at $17,246.
• US economic indicators eased fears of another hawkish Fed move next week, supporting the NASDAQ Composite Index and the broader crypto market.
• In response, the Fear & Greed Index exited the Extreme Fear zone, with an increase from 25/100 to 26/100.

On Thursday, bitcoin (BTC) rallied by 2.37%. Reversing a 1.45% decline from Wednesday, BTC ended the day at $17,246. Notably, BTC ended the day at $17,000 for the fifth time in nine sessions, supporting calls of a bottoming out.

A range-bound morning saw BTC fall to a morning low of $16,756. However, steering clear of the First Major Support Level (S1) at $16,646, BTC rallied to a late high of $17,323. BTC broke through the First Major Resistance Level (R1) at $17,101 to end the day at $17,246.

US Economic Indicators Deliver Bullish NASDAQ and BTC Sessions

On Thursday, the US labor market was back in the spotlight. Following last week’s Jobs Report, a marked decline in jobless claims would have fueled bets of a 75-basis point interest rate hike.

In the week ending December 2, initial jobless claims increased from 226k to 230k, with continuing jobless claims up from 1,609k to 1,671k. The increase was modest enough to avoid reigniting fears of a US economic recession while weak enough to support a December Fed pivot.

Following Thursday’s numbers, the probability of a 75-basis point rate hike fell from 21.8% to 20.6%. One month ago, the chances of a 75-basis point rate hike stood at 43.2%.

The NASDAQ Composite Index and the S&P500 responded to the latest numbers, rising by 1.13% and 0.75%, respectively.

Today, the US economic indicators will continue to influence. US wholesale inflation and consumer sentiment figures will draw interest and influence sentiment toward the December monetary policy decision.

An unexpected pickup in wholesale inflation would refuel bets of another 75-basis point interest rate hike on Wednesday and sink the NASDAQ and crypto market.

With the busy US economic calendar, we expect the crypto market to continue tracking the NASDAQ Composite Index, barring a material crypto event. This morning, the NASDAQ mini was up 7.5 points.

The Fear & Greed Index Crawls Out of the Extreme Fear Zone

Today, the BTC Fear & Greed Index rose from 25/100 to 26/100. Significantly, the Index moved out of the Extreme Fear zone for the second time in three sessions.

While risk-on sentiment, supported by the latest weekly jobless claims, delivered BTC a boost, the Index reflected investor caution ahead of today’s US stats.

Higher-than-expected wholesale inflation numbers could refuel bets of another 75-basis point interest rate hike. Fears of a hawkish Fed move would likely weigh on the NASDAQ, BTC, and the Fear & Greed Index.

Near-term, 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 0.01% to $17,247.

Technical Indicators

BTC needs to avoid the $17,108 pivot to target the First Major Resistance Level (R1) at $17,461 and test resistance at $17,500. A move through the Thursday high of $17,323 would signal a bullish session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,675. The Third Major Resistance Level (R3) sits at $18,242.

A fall through the pivot would bring the First Major Support Level (S1) at $16,894 into play. Barring an extended sell-off, BTC should avoid sub-$16,750 and the Second Major Support Level (S2) at $16,541. The Third Major Support Level (S3) sits at $15,974.

Soft US wholesale inflation figures and a pickup in consumer sentiment should deliver a bullish afternoon session.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat below the 200-day EMA, currently at $17,323. The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through the 200-day ($17,323) and R1 ($17,461) would give the bulls a run at R2 ($17,675) and $18,000. However, a fall through the 50-day EMA ($16,944) and the 100-day EMA ($16,935) would bring S1 ($16,894) and sub-$16,750 into view.