BTC Fear & Greed Index Signals a BTC Run at $25,000

Key Insights:

• It was a bearish Saturday, with BTC falling by 0.16% to end the day at $23,029.
• Increased crypto market scrutiny tested buyer appetite while easing contagion risk and sentiment toward Fed monetary policy provided support.
• Despite the bearish session, the Fear & Greed Index returned to the Greed zone, rising from 52/100 to 55/100.

On Saturday, bitcoin (BTC) fell by 0.16%. Partially reversing a 0.27% gain from Friday, BTC ended the day at $23,029. BTC wrapped up the day at $23,000 for the fourth consecutive session.

A bullish start to the day saw BTC rise to an early high of $23,181. Coming up short of the First Major Resistance Level (R1) at $23,524, BTC slid to an early afternoon low of $22,876. However, steering clear of the First Major Support Level (S1) at $22,571, BTC returned to $23,000 to limit the loss on the day.

Increased Crypto Market Scrutiny Weighed Amidst Easing Contagion Risk

There were no external market forces to guide investors on Saturday. However, the White House Administration cryptocurrency roadmap and SEC Chair Gary Gensler tested investor appetite.

The roadmap followed the Thursday release of a 116-page FTX creditor list that included US-listed corporations and financial institutions such as Goldman Sachs (GS).

Significantly, the Administration called on regulators to manage the exposure of financial institutions to cryptos, saying,

“We encourage regulators to continue these efforts, including those designed to address and limit financial institutions’ exposure to the risks of digital assets.”

The latest roadmap will cause increased regulatory uncertainty as crypto platforms attempt to restore investor confidence in the wake of the FTX and Genesis bankruptcies. However, while regulatory risk remains a headwind, a shift in sentiment toward Fed monetary policy and easing FTX and Genesis contagion risk remain tailwinds.

Today, investors should monitor updates from the FTX and Genesis bankruptcy proceedings and any further regulatory chatter.

In the final hour, the NASDAQ mini will likely influence as investors turn their attention to Wednesday’s Fed interest rate decision. Bets are for a 25-basis point interest rate hike and a less aggressive interest rate trajectory to bring inflation to target.

The Fear & Greed Index Returns to the Greed Zone

Today, the BTC Fear & Greed Index rose from 52/100 to 55/100. Despite a bearish BTC session, the Index returned to the Greed zone for the second time in three days.

While increased regulatory scrutiny weighed on investor sentiment, BTC wrapped up the day at $23,000, suggesting investor resilience. Market sentiment toward Fed monetary policy, FTX, and Genesis likely provided support. The latest move supports a near-term BTC return to $25,000.

However, the Index needs to avoid a return to the Neutral zone (54/100) to support a BTC run at $25,000. A fall into the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.63% to $23,173. A bullish start to the day saw BTC rally to an early high of $23,523 before easing back. BTC briefly broke through the First Major Resistance Level (R1) at $23,181 and the Second Major Resistance Level (R2) at $23,334.

Technical Indicators

BTC needs to avoid a fall through the $23,029 pivot to support another breakout from the First Major Resistance Level (R1) at $23,181 to retarget the Second Major Resistance Level (R2) at $23,334 and the early high of $23,523.

A return to the morning high of $23,523 would support a breakout session. However, the crypto news wires should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Third Major Resistance Level (R3) at $23,639 and resistance at $24,000.

A fall through the pivot would bring the First Major Support Level (S1) at $22,876 into play. However, barring a broad-based crypto sell-off, BTC should avoid sub-$22,500. The Second Major Support Level (S2) at $22,724 should limit the downside. The Third Major Support Level (S3) sits at $22,419.

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 $22,603. 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 ($22,603) would support a breakout from R1 ($23,181) to retarget R2 ($23,334) and the morning high of $23,523. However, a fall through S1 ($22,876) would give the bears a run at S2 ($22,724) and the 50-day EMA ($22,603).

A fall through the 50-day EMA would send a bearish signal.