BTC Fear & Greed Index Slides to Neutral on Regulatory Jitters

Key Insights:

• It was a bearish Thursday, with BTC falling by 1.00% to end the day at $23,950.
• Regulatory risk jitters resurfaced, with the SEC, the Fed, and the IMF targeting the digital asset space.
• The Fear & Greed Index responded to the increased scrutiny by returning to the Neutral zone.

On Thursday, bitcoin (BTC) fell by 1.00%. Following a 1.12% loss on Wednesday, BTC ended the day at $23,950. The bearish session left BTC at sub-$24,000 for the first time in seven sessions. BTC extended its losing streak to three sessions,

A bullish start to the day saw BTC rise to an early morning high of $24,600. Coming up against the First Major Resistance Level (R1) at $24,591, BTC slid to a mid-day low of $23,622. BTC briefly fell through the First Major Support Level (S1) at $23,684 before ending the day at $23,950.

Regulatory Activity Leaves BTC on an Extended Losing Streak

On Thursday, increased regulatory scrutiny of the digital asset space weighed on investor sentiment.

The Fed joined the SEC, the US DoJ, and the CFTC in targeting the digital asset space. However, the IMF also shared its views on the digital assets space, releasing a paper on digital assets and effective policies to manage crypto-related risks.

News of the SEC and the New York Department of Financial Services (NYDFS) objecting to the Binance.US acquisition of Voyager was also bearish. Binance.US plans to acquire Voyager contributed to easing contagion risk at the end of 2022.

However, US economic indicators and the NASDAQ Composite Index provided modest afternoon support.

In Q4, the US economy expanded by 2.7%, down from a prelim 3.2%. Economists forecast growth of 2.9%. However, labor market conditions continued to tighten, with initial jobless claims falling from 195k to 192k. Economists forecast an increase to 200k.

The NASDAQ Composite Index rose by 0.72% in response to the numbers and corporate earnings. However, the NASDAQ mini was down 16 points this morning.

The Day Ahead

US economic indicators and the NASDAQ Index will influence the afternoon session. Core PCE Price Index, personal income, and spending will draw interest. An unexpected rise in the Core PCE Price Index would refuel Fed Fear going into the weekend.

Investors should also track FOMC member chatter. FOMC member Loretta Mester will speak today.

However, US regulatory activity and US lawmaker chatter will need continued monitoring. Investors should also track the crypto news wires for Binance, FTX, Silvergate Bank updates, and SEC v Ripple news that could move the dial.

 

The Fear & Greed Index Slides into the Neutral Zone

Today, the BTC Fear & Greed Index fell from 59/100 to 53/100. Significantly, the Index returned to the Neutral zone for the first time since February 15.

Increased regulatory scrutiny and lingering Fed Fear led to a bearish BTC session and the Index pullback.

After falling into the Neutral zone, the Index must return to the Greed zone to support a BTC breakout from $25,000 to target $30,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.06% to $23,935. A range-bound start to the day saw BTC rise to an early high of $24,031 before falling to a low of $23,906.

Technical Indicators

BTC needs to move through the $24,057 pivot to target the First Major Resistance Level (R1) at $24,493 and the Thursday high of $24,600. A return to $24,500 would signal a breakout session. The crypto news wires and US stats should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $25,035 and resistance at $25,500. The Third Major Resistance Level (R3) sits at $26.013.

Failure to move through the pivot would leave the First Major Support Level (S1) at $23,515 in play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$23,000. The Second Major Support Level (S2) at $23,079 should limit the downside.

The Third Major Support Level (S3) sits at $22,101.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a mixed signal. BTC sat below the 50-day EMA ($24,053). The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering mixed signals.

A move through the 50-day EMA ($24,053) would support a breakout from R1 ($24,493) to target R2 ($25,035) and $25,500. However, a fall through the 100-day EMA ($23,630) and S1 ($23,515) would give the bears a run at S2 ($23,079) and the 200-day EMA ($22,804). A move through the 50-day EMA ($24,053) would send a bullish signal.