BTC Fear & Greed Index Stays Neutral as Headwinds Peg BTC Back

Key Insights:

• It was a bearish Sunday, with BTC falling by 0.32% to end the day at $21,796.
• Fed Fear and the NASDAQ mini and increased crypto regulatory risk left BTC in negative territory.
• The Fear & Greed Index remained within the Neutral zone despite falling from 50/100 to 48/100.

On Sunday, bitcoin (BTC) fell by 0.32%. Partially reversing a 1.04% gain from Saturday, BTC ended the week down 4.95% to $21,796. BTC wrapped up the day at sub-$22,000 for the fourth consecutive session while revisiting $22,000 for the first time in three sessions.

After a mixed morning session, BTC rose to a late afternoon high of $22,096. Coming up short of the First Major Resistance Level (R1) at $21,977, BTC slid to a late low of $21,666. BTC briefly fell through the First Major Support Level (S1) at $21,684 before ending the day at $21,796.

Fed Fear and SEC Focus on Staking Left BTC at Sub-$22,000 Levels

On Sunday, there were no external market forces to provide direction. Following brief relief on Saturday, investor focus likely returned to the SEC and Fed monetary policy, leaving dip buyers on the sidelines.

After last week’s hawkish Fed chatter, in response to the US Jobs Report, bets are for a more hawkish Fed and a peak interest rate above 5%. Tomorrow’s US CPI Report could dictate the interest rate trajectory to bring inflation to target.

Tight labor market conditions and better-than-expected survey-based PMI numbers give the Fed the wriggle room to make more aggressive policy moves.

However, regulatory risk has added to the bearish sentiment following the news of Kraken settling with the SEC and ceasing US crypto staking services. While investors may be able to stomach a ban on centralized exchanges offering staking services, a blanket ban could materially impact the US digital asset space.

Today, FTX, Genesis, and Silvergate Bank updates need monitoring. However, SEC chatter and the NASDAQ Composite Index will provide direction along with any Fed commentary.

The Fear & Greed Index Remains Neutral Despite a Bearish BTC

Today, the BTC Fear & Greed Index remained within the Neutral zone despite falling from 50/100 to 48/100. Fed Fear and the fear of a blanket ban on US staking services continued to influence crypto investor sentiment, leaving the Index in the Neutral zone.

Investors will likely remain in wait-and-see mode today. On Tuesday, the US CPI Report could dictate the Fed interest rate path over the near term.

While Fed Fear remains a headwind, regulatory news will also have a material price impact on BTC and the broader crypto market. A US ban on crypto staking would be a worst-case scenario.

After returning to the Neutral zone, the Index must avoid the Fear zone to support a BTC run at $23,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.09% to $21,777. A range-bound start to the day saw BTC rise to an early high of $21,810 before falling to a low of $21,777.

Technical Indicators

BTC needs to move through the $21,853 pivot to target the First Major Resistance Level (R1) at $22,039 and the Sunday high of $22,096. A return to $22,000 would signal a breakout session. The crypto news wires need to 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 $22,283. The Third Major Resistance Level (R3) sits at $22,713.

Failure to move through the pivot would leave the First Major Support Level (S1) at $21,609 in play. However, barring a risk-off-fueled crypto sell-off, BTC should avoid sub-$21,000. The Second Major Support Level (S2) at $21,423 should limit the downside. The Third Major Support Level (S3) sits at $20,993.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat above the 200-day EMA ($21,714). After a bearish cross on Saturday, the 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A hold above the 200-day EMA (21,714) would support a breakout from R1 ($22,039) to target R2 ($22,283) and the 50-day EMA ($22,334). However, a fall through the 200-day EMA ($21,714) would bring S1 ($21,609) and sub-$21,500 into view. A move through the 50-day EMA would signal a near-term bearish trend reversal.