BTC Fear & Greed Index Sees Greed to Signal a BTC Run at $27,000

Key Insights:

• It was a bullish Wednesday, with BTC surging by 9.55% to end the day at $24,318.
• Lawmaker chatter on Capitol Hill and new SEC rules ease regulatory jitters.
• The Fear & Greed Index returned to the Greed zone, rising from 53/100 to 62/100.

On Wednesday, bitcoin (BTC) surged by 9.95%. Following a 1.95% gain on Tuesday, BTC ended the day at $24,318. BTC wrapped up the day at $24,000 for the first time since August.

A bearish start to the day saw BTC fall to an early morning low of $22,082 before making a move. Steering clear of the First Major Support Level (S1) at $21,722, BTC surged to a final-hour high of $24,393. BTC broke through the Major Resistance Levels to end the day at $24,318.

US Lawmakers and New SEC Rules Eased Investor Jitters

What a difference a day makes!

Following US lawmaker scrutiny of the SEC on Tuesday, the SEC took a different approach to tackle the digital asset space on Wednesday.

The SEC proposed amendments to their custody rules to incorporate cryptocurrencies on Wednesday. In addition to custody rules, the changes would also include amendments relating to reporting obligations, bookkeeping, and the registration of investment advisers.

The markets responded favorably to the more measured approach to protecting investors’ assets. Signficantly, the SEC approach vastly differed from the SEC moves against Kraken and the Binance USD (BUSD).

Following plenty of anti-crypto rhetoric from Capitol Hill, fueled by the collapse of FTX, news of lawmakers reintroducing the Financial Freedom Act was also market positive.

Former speaker of the House of Representatives Nancy Pelosi tweeted,

“Sen. Tuberfille (R) plans to reintroduce the “Financial Freedoms Act.”

Adding,

“It aims to stop the Dep of Labor from restricting individuals from investing their 401ks into crypto. Every American should have the right to invest their retirement money how they see fit.”

US economic indicators supported riskier assets, with the NASDAQ Composite Index rising by 0.92% on Wednesday. The NASDAQ mini was up 50 points this morning.

BTC briefly dipped in response to a 3.0% surge in January retail sales. Economists forecast a 1.8% increase. Retail sales had fallen for two consecutive months before January’s marked increase in consumption.

The Day Ahead

Investors should continue monitoring the crypto news wires for FTX, Genesis, and Silvergate Bank updates. However, SEC activity and US lawmaker chatter will remain the focal points.

In the afternoon session, the NASDAQ Composite Index will also influence as the markets respond to US wholesale inflation and jobless claims numbers. A sharp rise in jobless claims and softer wholesale inflation numbers would be a bullish combination.

The Fear & Greed Index Enters the Greed Zone

Today, the BTC Fear & Greed Index reacted to the BTC return to $24,000. The Index returned to the Greed zone, jumping from 53/100 to 62/100.

Easing regulatory jitters returned the Index to the Greed zone, with US lawmaker support key to the shift in sentiment. With investors anticipating the Fed to push interest rates above 5%, US economic indicators eased fears of a US economic recession, also supporting the marked improvement in investor sentiment.

After returning to the Greed zone, the Index must avoid the Neutral zone to support a BTC run at $27,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

SEC activity and US lawmaker chatter will remain the key drivers over the near term.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.41% to $24,662. A bullish start to the day saw BTC rise from an early low of $24,277 to a high of $24,867.

Technical Indicators

BTC needs to avoid a fall through the $23,598 pivot to target the First Major Resistance Level (R1) at $25,113. A move through the morning high of $24,867 would signal a breakout session. The crypto news wires and US stats need to 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 $25,908 and resistance at $27,000. The Third Major Resistance Level (R3) sits at $28,220.

A fall through the pivot would bring the First Major Support Level (S1) at $22,802 into play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$22,000 and the Second Major Support Level (S2) at $21,287.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 100-day EMA ($22,424). The 50-day EMA converged on the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A bullish cross of the 50-day EMA through the 100-day EMA would support a breakout from R1 ($25,113) to target R2 ($25,909) and $27,000. However, a fall through S1 ($22,802) would bring the 100-day ($22,424) and 50-day ($22,425) EMAs into view. A fall through the 50-day EMA would send a bearish signal.