BTC Fear & Greed Index Signals Another Breakout BTC Session

Key Insights:

• It was a bullish Friday, with BTC rallying by 5.70% to end the day at $19,930.
• Crypto news updates and market reaction toward US economic indicators and corporate earnings delivered another breakout session.
• The Fear & Greed Index jumped from 31/100 to 46/100 on BTC return to $20,000.

On Friday, bitcoin (BTC) rallied by 5.70%. Following a 5.04% breakout on Thursday, BTC ended the day at $19,930. Notably, BTC visited $20,000 for the first time since November 8 and extended its winning streak to six sessions, its longest winning streak since September.

A mixed start to the day saw BTC fall to an early low of $18,725 before making a move. Steering clear of the First Major Support Level (S1) at $18,611, BTC rallied to a late high of $20,000. BTC broke through the First Major Resistance Level (R1) at $19,357 and the Second Major Resistance Level (R2) at $19,857 to end the day at $19,930.

FTX, US Economic Indicators, and Corporate Earnings Deliver $20,000

On Friday, US corporate earnings and economic indicators supported another bullish session. According to prelim figures, the Michigan Consumer Sentiment Index rose from 59.7 to 64.6 in January versus a forecasted 60.5. Significantly, the inflation expectations Index fell from 4.4% to 4.0%, its lowest level since June 2021.

JPMorgan Chase (JPM) and Bank of America (BAC) added to the bullish mood. JPMorgan and Bank of America beat earnings estimates, while Citigroup (C) fell short.

In response, the NASDAQ Composite Index rose by 0.71%, with the S&P500 gaining 0.40%.

While the US economic and earnings calendars delivered support, easing FTX contagion fear remained the key driver behind the reversal of the losses stemming from the collapse of FTX.

Investors continued to respond to the news from the bankruptcy Courts on FTX. The reports from mid-week of more than $5 billion in cash and cash equivalents and nonstrategic assets with a value of $4.6 billion eased contagion from the collapse of FTX. The latest findings could make FTX creditors whole.

Today, investors will likely continue to respond to the shift in sentiment toward FTX contagion. However, crypto market headwinds, including regulatory risk, need consideration. With the SEC targeting crypto exchanges, it could be a choppy session as the markets await the outcome of the SEC v Ripple case.

The Fear & Greed Index Responds to BTC Return to $20,000

Today, the BTC Fear & Greed Index jumped from 31/100 to 46/100. Significantly, the Index moved to the Fear-Neutral zone border. Easing FTX contagion, bets of a Fed 25-basis point interest rate hike, and a soft landing delivered a perfect storm.

Having avoided sub-20/100 and retraced the slump in response to the collapse of FTX, the Index needs to return to the Neutral zone to support the BTC move towards $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 4.26% to $20,779. A bullish start to the day saw BTC jump from an early low of $19,897 to a high of $21,378. BTC broke through the First Major Resistance Level (R1) at $20,378 and briefly through the Second Major Resistance Level (R2) at $20,827.

Technical Indicators

BTC needs to avoid a fall through R1 and the $19,552 pivot to retarget the Second Major Resistance Level (R2) at $20,827 and the morning high of $21,378. A return to $21,300 would signal an extended rally. However, the crypto news wires should be market-friendly to support another breakout.

In the event of an extended rally, BTC would likely test the Third Major Resistance Level (R3) at $22,102.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $19,103 into play. Barring a crypto event-fueled sell-off, BTC should avoid sub-$19,000 and the Second Major Support Level (S2) at $18,277. The Third Major Support Level (S3) sits at $17,002.

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 $17,910. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($17,910) would support a breakout from R2 ($20,827) to target R3 ($22,102). However, a fall through S1 ($19,103) would give the bears a run at the S2 ($18,277) and 50-day EMA ($17,910). A fall through the 50-day EMA would signal a shift in sentiment.