BTC Fear & Greed Index Slides as US Recession Fears Reignite

Key Insights:

• It was a bearish Wednesday, with BTC sliding by 2.14% to end the day at $20,684.
• US economic indicators and FOMC member chatter sent the NASDAQ Index and BTC into the red.
• The Fear & Greed Index returned to the Fear zone, sliding from 52/100 to 45/100.

On Wednesday, bitcoin (BTC) slid by 2.14%. Following a 0.29% loss on Tuesday, BTC ended the day at $20,684. Notably, BTC ended the day at sub-$21,000 for the first time in three sessions.

After a range-bound morning, BTC rose to an early afternoon high of $21,639 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $21,530 before sliding to a late afternoon low of $20,408. BTC fell through the First Major Support Level (S1) at $20,797 and briefly through the Second Major Support Level (S2) at $20,459.

Finding late support, BTC moved back through S2 to end the day at $20,684.

US Economic Indicators and FOMC Member Chatter Send BTC South

US economic indicators weighed on riskier assets for a second consecutive session.

In December, retail sales tumbled by 1.1%, with industrial production falling by 0.7%. Both numbers were worse than forecasts. Softer wholesale inflation figures provided little comfort, despite the producer price index rising by 6.2% year-on-year in December versus 7.3% in November.

FOMC member chatter also contributed to the bearish sentiment. FOMC members James Bullard and Loretta Mester reportedly supported rates moving beyond 5% to bring inflation to target.

The hawkish chatter caught investors by surprise, with disappointing US stats doing little to force FOMC members into a less hawkish stance on monetary policy. The NASDAQ Composite Index and the S&P 500 ended the day with losses of 1.24% and 1.56%, respectively.

However, reports of Genesis planning to file for bankruptcy added to the bearish mood. Recession jitters, a hawkish Fed, and further fallout from the crypto winter left BTC at sub-$21,000.

Today, US economic indicators and FOMC member chatter will continue to influence. Philly Fed Manufacturing Index and jobless claims will be in focus. While the jobless claim figures will likely be the key, a slide in the Manufacturing Index would raise more red flags.

Beyond the economic calendar, US corporate earnings will also influence. Netflix (NFLX) will be among the names releasing earnings results today.

This morning, the NASDAQ mini was down 20.75 points.

The Fear & Greed Index Inches Higher Despite BTC Loss

Today, the BTC Fear & Greed Index slid from 52/100 to 45/100. Significantly, the Index returned to the fear zone, weighed by BTC ending the session at sub-$21,000.

Easing FTX contagion risk failed to deliver support, with the news on Genesis, US recession fears, and hawkish Fed chatter delivering a blow.

The Index will be in for another test today, with a busy economic calendar, corporate earnings, and Fed chatter to influence.

Near-term, the Index would need to return to the Greed zone (55/100) to support a BTC run at $25,000. The Index last visited the Greed zone in March 2022.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.16% to $20,718. A bullish start to the day saw BTC rise from an early low of $20,670 to a high of $20,759.

Technical Indicators

BTC needs to move through the $20,910 pivot to target the First Major Resistance Level (R1) at $21,413 and the Wednesday high of $21,639. A return to $21,000 would support a bullish session. However, the crypto news wires and US economic indicators should be market-friendly to deliver a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $22,141 and resistance at $22,500. The Third Major Resistance Level (R3) sits at $23,372.

Failure to move through the pivot would leave the First Major Support Level (S1) at $20,182 in play. Barring a risk-off-fueled sell-off, BTC should avoid sub-$20,000 and the Second Major Support Level (S2) at $19,679. The Third Major Support Level (S3) sits at $18,448.

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 $20,088. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($20,182) and the 50-day EMA ($20,088) would support a breakout from R1 ($21,413) to target R2 ($22,141) and $22,500. However, a fall through S1 ($20,182) and the 50-day EMA ($20,088) would give the bears a run at S2 ($19,679). A fall through the 50-day EMA would signal a shift in sentiment.