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

Key Insights:

• On Sunday, bitcoin (BTC) fell by 3.51% to end the week at sub-$20,000.
• Fed Fear resurfaced, with a lack of market distraction leaving investors to look ahead to Wednesday’s Fed rate hike and FOMC projections.
• The Bitcoin Fear & Greed Index slid from 27/100 to 21/100, weighed by the BTC return to sub-$20,000.

On Sunday, bitcoin (BTC) slid by 3.51%. Reversing a 1.57% gain from Saturday, BTC ended the week down 11.1% to $19,418.

Bearish throughout the Sunday session, BTC tumbled from an early high of $20,125 to a late low of $19,350. BTC fell through the First Major Support Level (S1) at $19,851 and the Second Major Support Level (S2) at $19,576 to end the day at sub-$19,500.

Several factors may have contributed to the Sunday reversal. However, investor sentiment towards the Fed’s monetary policy decision and FOMC projections likely weighed. Recession fears added to the market angst. A hawkish Fed and downward revisions to growth projections would be a bad combination for riskier assets.

On Sunday, the probability of a 75-basis point was 79.0% versus 21.0% for a percentage point hike. The latest split was more hawkish than Saturday when the chance of a percentage point rate hike stood at 18%.

With the Fed policy decision being the main event, the crypto market will likely continue to track the NASDAQ 100.

Bitcoin Fear & Greed Index Returns to the Extreme Fear Zone

Today, the Fear & Greed Index slid from 27/100 to 21/100. The Index responded to the bearish crypto market session and a BTC return to sub-$20,000. Significantly, the Index fell back into the Extreme Fear zone, reflecting investor angst over the Fed and the economic outlook.

Avoiding sub-20/100 was the key, though the bears will be eying a fall to sub-20/100 to signal a BTC slide to sub-$18,000. By contrast, the bulls will look for an Index return to 40/100 to support a move toward $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.25% to $19,467. A mixed start to the day saw BTC fall to an early low of $19,401 before rising to a high of $19,522.

Technical Indicators

BTC needs to move through the $19,631 pivot to target the First Major Resistance Level (R1) at $19,912 and the Sunday high of $20,125. With investors looking ahead to Wednesday’s monetary policy decision, the NASDAQ 100 will likely influence. There are no US economic indicators to consider today.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,406 and resistance at $20,500. The Third Major Resistance Level (R3) sits at $21,181.

Failure to move through the pivot would leave the First Major Support Level (S1) at $19,137 in play. Barring an extended sell-off, BTC should avoid the September low of $18,549. The Second Major Support Level (S2) at $18,856 should limit the downside.

The Third Major Support Level (S3) sits at $18,081.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $20,195. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

A move through R1 ($19,912) and the 50-day EMA ($20,195) would give the bulls a run at the 100-day EMA ($20,388) and R2 (20,406). The 200-day EMA sits at $20,822. However, failure to move through the 50-day EMA would leave BTC under pressure.

Trend Analysis

Looking at the trends, BTC would need a move through the August high of $25,203 and $25,500 to target the June high of $31,956. Avoiding a fall through the September low of $18,549 would support a move back towards $25,000.

However, the trend has turned bearish following Tuesday, Thursday, and Sunday’s losses. A fall through the September low of $18,549 would bring sub-$18,000 and the June low of $17,601 into play. A Fear & Greed Index return to 30/100 should support a shift in sentiment, which may hinge on the Fed.