BTC Fear & Greed Index Slips as the Focus Returns to US Inflation

Key Insights:

• On Saturday, bitcoin (BTC) rose by 1.32% to end the day at $21,656.
• It was a quiet day on the crypto news wires, with no external market forces to shift investor sentiment going into the weekend.
• The Bitcoin Fear & Greed Index slipped from 28/100 to 26/100 but avoided a return to the Extreme Fear zone.

On Saturday, bitcoin (BTC) rose by 1.32%. Following Friday’s 10.61% breakout, BTC ended the day at $21,656.

After a mixed morning session, BTC fell to an early afternoon low of $21,139. Avoiding the First Major Support Level (S1) at $19,921, BTC rallied to a late high of $21,802. Coming up short of the First Major Resistance Level (R1) at $22,207, BTC eased back to end the day at $21,656.

Other than news chatter on Gary Gensler’s views on the classification of BTC and the broader crypto market, it was a quiet session as investors looked ahead to the Ethereum (ETH) Merge.

Following four consecutive days in the green and a first hold onto the $21,000 handle since August 18, investor focus will shift to US economic indicators. This week, inflation and retail sales will be areas of interest. A spike in inflation would catch the bitcoin bulls off guard.

However, economists forecast mixed inflation numbers, with the core inflation forecast to rise while forecasting headline inflation to soften. Softer inflation and a pickup in consumption would support the Fed’s front loading and a widely anticipated 75-basis point rate hike this month.

Bitcoin Fear & Greed Index Falls but Avoids the Extreme Fear Zone

Today, the Fear & Greed Index slipped from 28/100 to 26/100. The modest fall came despite bitcoin enjoying a fourth consecutive rise and a hold onto the $21,000 handle. Investor caution ahead of this week’s US economic indicators likely contributed to the decline.

Going into the week, the Index will need to hold above 20/100 to support the current BTC upswing. The bulls will look for an Index return to 40/100 to signal a BTC run at $25,000.

However, 20/100 remains the line in the sand, with an Index decline to sub-20 likely to bring sub-$18,000 into play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down by 0.22% to $21,609. A mixed start to the day saw BTC rise to an early high of $21,688 before falling to a low of $21,546.

Technical Indicators

BTC needs to avoid the $21,532 pivot to target the First Major Resistance Level (R1) at $21,926. A bullish morning session would support a breakout from the Saturday high of $21,802.

Another extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $22,195 and resistance at $22,500. The Third Major Resistance Level (R3) sits at $22,858. However, with the US markets closed for the weekend, BTC will need to wait for the final hour (UTC) for direction from the NASDAQ 100 Mini.

A fall through the pivot would bring the First Major Support Level (S1) at $21,263 into play. Barring an extended sell-off, BTC should avoid sub-$21,000 and the Second Major Support Level (S2) at $20,869.

The Third Major Support Level (S3) sits at $20,206.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 200-day EMA, currently at $21,047.

The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish price signals.

A bullish cross of the 50-day EMA through the 100-day EMA would give the bulls a run at $22,000. However, BTC has to avoid the 200-day EMA to deliver another bullish session. A fall through S1 ($21,263) and the 200-day EMA ($21,047) would bring sub-$21,000 support into view.

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 EMAs and the September low of $18,549 would support a move back towards $25,000.

However, the BTC fall through the September low of $18,549 would bring sub-$18,000 and the June low of $17,601 into play.