BTC Fear & Greed Index Signals Another Bearish Session Ahead

Key Insights:

• It was a bearish Saturday, with BTC declining by 0.06% to end the day at $16,958.
• News of Huobi Global laying off 20% of its workforce in an ongoing restructuring fueled the crypto market rumor mill to peg BTC back from a return to $17,000.
• However, the Fear & Greed Index held steady at 25/100, signaling a bearish session ahead.

On Saturday, bitcoin (BTC) slipped by 0.06%. Following a 0.75% gain on Friday, BTC ended the day at $16,958. BTC fell short of $17,000 while avoiding sub-$16,500.

A bullish start to the day saw BTC rise to an early morning high of $16,990. Coming up short of the First Major Resistance Level (R1) at $17,216, BTC fell to a late morning low of $16,924. Finding support at the First Major Support Level (S1) at $16,925, BTC ended the day at $16,958.

Falling Trading Volumes and Huobi Global News Leave BTC Flat

It was a quiet Saturday session, with BTC trading volumes falling through the day. Following the bullish Friday session, driven by easing bets of a 50-basis point Fed rate hike in February, there were no external market forces to guide investors.

A contraction in the non-manufacturing sector likely raised concerns over the economic outlook. Fears of an economic hard landing will linger amidst Fed policy uncertainty.

With the US unemployment rate at 3.5%, the Fed has plenty of wriggle room to bring inflation to target without risking an unemployment rate of above the 5% mandate.

While volumes were lighter, news of Huobi Global laying off 20% of its workforce left investors on the sidelines. There was no broad-based crypto market sell-off, with reports of Justin Sun transferring $100 million in stablecoins to the platform easing fears of a liquidity crunch. Huobi token (HT) rose by 0.51% on Saturday.

However, crypto winter contagion risk remains a headwind, which leaves Huobi exposed to the rumor mill.

Today, investors will continue monitoring the crypto news wires. Any talk of Huobi planning to freeze withdrawals would spook investors. In the final hour, the NASDAQ mini will also influence as investors prepare for the second trading week of the year.

The Fear & Greed Index Remains Within the Extreme Fear Zone

Today, the BTC Fear & Greed Index held steady at 25/100. Following Saturday’s fall into the Extreme Fear zone, there were no events or external market forces to support a return to the Fear zone.

Fears of a US economic recession, a marked shift in the regulatory landscape, and contagion remain headwinds that have pegged the Index back from a return to the Neutral zone.

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 0.09% to $16,942. A range-bound start to the day saw BTC rise to an early high of $16,968 before falling to a low of $16,930.

Technical Indicators

BTC needs to move through the $16,957 pivot to target the First Major Resistance Level (R1) at $16,991. A return to $17,000 would signal a bullish session. However, the crypto news wires should be market-friendly to support a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,023. The Third Major Resistance Level (R3) sits at $17,089.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,925 in play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,850. The Second Major Support Level (S2) at $16,891 should limit the downside. The Third Major Support Level (S3) sits at $16,825.

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 more bullish signal. BTC sat above the 200-day EMA, currently at $16,918. After the bullish cross on Saturday, the 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($16,918) would support a breakout from R1 ($16,991) to target R2 ($17,023). However, a fall through S1 ($16,925) and the 200-day EMA ($16,918) would give the bears a run at S2 ($16,891). A fall through the 50-day EMA ($16,820) would be a bearish signal.