BTC Fear & Greed Index Signals a Bullish BTC Session Despite Headwinds

Key Insights:

• It was a bearish Monday, with BTC falling by 0.25% to end the day at $23,502.
• Regulatory risk jitters and Fed Fear left BTC and the broader crypto market in the red, with Binance news adding to the bearish sentiment.
• The Fear & Greed Index remained within the Neutral zone despite the bearish BTC session, rising from 50/100 to 53/100.

On Monday, bitcoin (BTC) fell by 0.25%. Partially reversing a 1.65% gain from Sunday, BTC ended the day at $23,502. The bearish session left BTC short of the $24,000 handle for the third consecutive day.

After a choppy morning, BTC rallied to a mid-afternoon high of $23,891. BTC broke through the First Major Resistance Level (R1) at $23,795 before hitting reverse. The reversal saw BTC slide to a late low of $23,131. BTC briefly fell through the First Major Support Level (S1) at $23,205 before ending the day at $23,502.

Fed Fear and Regulatory Risk Jitters Leave BTC Short of $24,000

Regulatory risk jitters returned on Monday, with investors digesting the news from the G20 and post-G20 comments that gave investors a taste of what to expect. While the G20 stopped short of an outright ban, the talk of introducing strict regulatory measures delivers uncertainty.

Amidst intense regulatory and lawmaker scrutiny, a Forbes report of Binance transferring $1.8 billion of user assets to hedge funds tested sentiment on Monday. At the time of writing, Binance CEO CZ had yet to respond to the report.

In the afternoon session, US economic indicators and the NASDAQ Composite Index provided brief relief. US core durable goods orders increased by 0.7% in January, reversing a 0.4% decline from December. Economists forecast a 0.1% rise. The Fed’s preferred Goods Orders Non-Defense Ex Air increased by 0.8%, reversing a 0.3% fall from December.

However, the latest stats supported a more aggressive Fed interest rate trajectory to return inflation to target. On Monday, the NASDAQ composite Index rose by 0.63%, with dip-buyers delivering support. The NASDAQ mini was up 10.75 points this morning.

The Day Ahead

Investors should continue to monitor the crypto news wires for regulatory activity and US lawmaker chatter. Binance and FTX updates need consideration together with news from the ongoing SEC v Ripple case.

US economic indicators and the NASDAQ Composite Index will influence the afternoon session. US consumer confidence figures for February will draw plenty of interest. A pickup in consumer confidence would give the Fed comfort in delivering more aggressive moves to curb inflation.

The Fear & Greed Index Rises Despite a Bearish BTC Session

Today, the BTC Fear & Greed Index rose from 50/100 to 53/100. Significantly, the Index avoided the Fear zone despite BTC falling short of the $24,000 handle for a third consecutive session. Crypto market headwinds weighed on investor sentiment, with Fed monetary policy and regulatory risk in focus.

After falling into the Neutral zone, the Index must return to the Greed zone to support a BTC breakout from $25,000 to target $30,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.06% to $23,487. A mixed start to the day saw BTC fall to an early low of $23,478 before rising to a high of $23,515.

Technical Indicators

BTC needs to move through the $23,508 pivot to target the First Major Resistance Level (R1) at $23,885 and the Monday high of $23,891. A return to $23,750 would signal a breakout session. The crypto news wires and Fed chatter should 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 $24,268. The Third Major Resistance Level (R3) sits at $25,028.

Failure to move through the pivot would leave the First Major Support Level (S1) at $23,125 in play. However, barring another crypto event-fueled crypto sell-off, BTC should avoid sub-$22,500. The Second Major Support Level (S2) at $22,748 should limit the downside.

The Third Major Support Level (S3) sits at $21,988.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 100-day EMA ($23,521). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day ($23,521) and 50-day ($23,620) EMAs would support a breakout from R1 ($23,885) to target R2 ($24,268). However, a fall through S1 ($23,125) would give the bears a run at the 200-day EMA ($22,918) and S2 ($22,748). A move through the 50-day EMA ($23,620) would send a bullish signal.