BTC Fear & Greed Index Signals Extreme Fear to Bring in 2023

Key Insights:

• On Friday, bitcoin (BTC) slipped by 0.24% to end the day at $16,618.
• US economic indicators and the NASDAQ sent BTC to session lows before a late recovery.
• The Fear & Greed Index slid from 28/100 to 25/100, signaling a bearish end to the year.

On Friday, bitcoin (BTC) fell by 0.24%. Partially reversing a 0.60% gain from Thursday, BTC ended the day at $16,618. Notably, BTC failed to revisit $17,000 for the tenth consecutive session.

After a bearish morning, BTC slid to an early afternoon of $16,358. BTC fell through the First Major Support Level (S1) at $16,550 and the Second Major Support Level (S2) at $16,443. However, finding NASDAQ support, BTC rallied to a late high of $16,667 before easing back.

Despite the late rally, BTC came up short of the First Major Resistance Level (R1) at $16,720.

US Economic Indicators and the NASDAQ Index Deliver a Mixed Session

Following the market reaction to the jobless claim figures on Thursday, US stats sent BTC and the NASDAQ Index into the red on Friday.

In December, the Chicago PMI jumped from 37.2 to 44.9, raising the threat of the Fed pursuing its aggressive interest rate trajectory to bring inflation to target. The crypto market tracked the NASDAQ Index through the afternoon session, falling to a session low before reversing the losses.

The late session recovery left the NASDAQ Index down 0.11% for the day. Fed monetary policy and the fear of an economic recession left the NASDAQ Index down 33.5% for the year, its worst outing since 2008.

Today, there are no economic indicators or the NASDAQ Index to influence. The lack of stats and the Fear & Greed Index could test investor appetite on the final trading session of the year.

However, investors should monitor the crypto news wires for any events that could move the dial.

The BTC Fear & Greed Index Slides into the Extreme Fear Zone

Today, the BTC Fear & Greed Index fell from 28/100 to 25/100. Significantly, the Index fell into the Extreme Fear zone, signaling a bearish end to 2022.

The pullback reflects the high level of uncertainty going into 2023. Fed and recession fears, geopolitics, regulatory risk, and contagion jitters remain headwinds that could send BTC further south and the Index deeper into the Extreme Fear 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 0.10% to $16,602. A range-bound start to the day saw BTC fall from an early high of $16,624 to a low of $16,601.

Technical Indicators

BTC needs to avoid the $16,548 pivot to target the First Major Resistance Level (R1) at $16,737. A move through the Friday high of $16,667 would signal a bullish session. However, the crypto news wires 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 $16,857 and resistance at $17,000. The Third Major Resistance Level (R3) sits at $17,166.

A fall through the pivot would bring the First Major Support Level (S1) at $16,428 into play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,000. The Second Major Support Level (S2) at $16,239 should limit the downside. The Third Major Support Level (S3) sits at $15,930.

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 $16,720. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($16,720) and R1 ($16,737) would support a run at the 100-day EMA ($16,817) and R2 ($16,857). A breakout from the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($16,720) would bring the Major Support Levels into view.