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

Key Insights:

• It was a mixed Tuesday, with BTC falling by 0.01% to end the day at $16,689.
• Market angst ahead of today’s FOMC meeting minutes weighed on the NASDAQ Index, leaving BTC flat for the session.
• However, the Fear & Greed Index rose from 26/100 to 29/100, signaling a bullish session ahead.

On Tuesday, bitcoin (BTC) slipped by 0.01%. Following a 0.28% gain on Monday, BTC ended the day at $16,689. Notably, BTC avoided sub-$16,500 for the fourth consecutive session while continuing to come up short of $17,000.

A bullish start to the day saw BTC rise to a mid-morning high of $16,810 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $16,801. The reversal saw BTC fall to a late afternoon low of $16,625. However, steering clear of the First Major Support Level (S1) at $16,582, BTC bounced back to end the day at $16,689.

Fed Fear Left BTC in a Tight Range on the First Day of US Trading

The US markets reopened on Tuesday, with sentiment toward the Fed driving demand for the greenback,

US economic indicators had a muted impact on the NASDAQ Index and BTC, despite a more marked contraction in the manufacturing sector. In December, the Markit-survey Manufacturing PMI fell from 47.7 to 46.2, in line with prelim numbers.

A joint statement from the Office of the Comptroller of the Currency, the Federal Reserve System, and the Federal Deposit Insurance Corporation Office appeared to have a muted impact on crypto appetite. Crypto investors have become accustomed to US lawmaker warnings.

The latest warning coincided with the former CEO of FTX pleading not guilty to fraud.

While economic indicators failed to move the dial on Tuesday, today’s stats will influence. The preferred ISM Manufacturing PMI and JOLTs job openings will provide riskier assets with direction in the afternoon session. However, the FOMC meeting minutes will have the most impact later in the session.

The markets expect hawkish minutes that would test the appetite for riskier assets. Barring a crypto event, BTC will likely track the NASDAQ Index through the afternoon session. On Tuesday, the NASDAQ fell by 0.76%, while the NASDAQ mini was up 3.25 points this morning.

The Fear & Greed Index Jumps Despite Incoming Fed Minutes

Today, the BTC Fear & Greed Index rose from 26/100 to 29/100.

Notably, the Index increased despite BTC falling short of $17,000. Another flat session that saw BTC avoid sub-$16,500 supported a pickup in investor sentiment.

However, today’s US economic indicators and FOMC meeting minutes will test investor appetite. A strong JOLTs report and hawkish FOMC meeting minutes would be bearish.

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 down 0.07% to $16,677. A range-bound start to the day saw BTC fall from an early high of $16,690 to a low of $16,676.

Technical Indicators

BTC needs to move through the $16,708 pivot to target the First Major Resistance Level (R1) at $16,791 and the Tuesday high of $16,810. A return to $16,800 would signal a bullish session. However, the US stats and FOMC meeting minutes need to be crypto-friendly to support a breakout session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $16,893 and resistance at $17,000. The Third Major Resistance Level (R3) sits at $17,078.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,606 in play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,500. The Second Major Support Level (S2) at $16,523 should limit the downside. The Third Major Support Level (S3) sits at $16,338.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA, currently at $16,689. The 50-day EMA eased back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($16,689) would give the bulls a run at the 100-day EMA ($16,758) and R1 ($16,791). A breakout from the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($16,689) would bring the Major Support Levels into view.