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

Key Insights:

• On Thursday, bitcoin (BTC) fell by 2.57%, marking the second loss in nine sessions.
• Market reaction to the Ethereum Merge and a bearish NASDAQ 100 session weighed.
• The Bitcoin Fear & Greed Index slid from 28/100 to 20/100, with the bearish BTC session sending the Index into the Extreme Fear zone.

On Thursday, bitcoin (BTC) fell by 2.57%. Reversing a 0.29% gain from Wednesday, BTC ended the day at $19,714. It was the first sub-$20,000 finish since September 8.

A mixed start to the day saw BTC rise to a mid-morning high of $19,508. Coming up short of the First Major Resistance Level at $20,639, BTC fell through the First Major Support Level (S1) at $19,727 to a low of $19,508 before briefly testing resistance at $20,000. However, a bearish end to the day saw BTC fall back through S1 to end the day at $19,714.

Market reaction to the Ethereum (ETH) Merge was bearish despite a reportedly seamless transition to a Proof-of-Stake (PoS) protocol. Adding to the market angst was a bearish NASDAQ 100 session. On Thursday, the NASDAQ 100 fell by 1.43%. Hopes of a less hawkish Fed faded, with US economic indicators supporting the anticipated 75-basis point rate hike.

Bitcoin Fear & Greed Index Slides into the Extreme Fear Zone

Today, the Fear & Greed Index slid from 28/100 to 20/100. The slide came in response to a BTC return to sub-$20,000 as investors reacted to the Merge and the bearish NASDAQ 100 session.

While the Index fell back into the Extreme Fear zone, avoiding sub-20/100 was the key.

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

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.19% to $19,752. A choppy start to the day saw BTC fall to an early low of $19,602 before rising to a high of $19,767.

Technical Indicators

BTC needs to move through the $19,851 pivot to target the First Major Resistance Level (R1) at $20,193 and the Thursday high of $20,330. Crypto-friendly US economic indicators would support a return to $20,000.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,673. The Third Major Resistance Level (R3) sits at $21,495. Market risk sentiment will need to improve ahead of the US session to support a breakout.

Failure to move through the pivot would bring the First Major Support Level (S1) at $19,371 into play. Barring an extended sell-off, BTC should avoid sub-$19,000. The Second Major Support Level (S2) at $19,029 should limit the downside.

The Third Major Support Level (S3) sits at $18,207.

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 $20,592.

Following Thursday’s bearish cross, 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.

BTC will need to move through the 50-day EMA ($20,592) and the 100-day EMA ($20,633) to target R2 ($20,673). However, failure to move through R1 ($20,193) and the 50-day EMA would leave the Major Support Levels in play.

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 current trend has turned bearish after Tuesday and Thursday’s losses. A BTC fall through the September low of $18,549 would bring sub-$18,000 and the June low of $17,601 into play.