BTC Fear & Greed Index Stays Neutral Signaling a BTC Return to $23,000

Key Insights:

• It was a bearish Tuesday, with BTC sliding by 1.24% to end the day at $22,627.
• Binance news and a bearish NASDAQ session left BTC in the red for the second time in six sessions.
• The Fear & Greed Index slipped from 52/100 to 51/100 but remained within the neutral zone.

On Tuesday, bitcoin (BTC) slid by 1.24%. Reversing a 0.87% gain from Monday, BTC ended the day at $22,627. Notably, BTC revisited $23,000 for the fourth consecutive session.

A bullish start to the day saw BTC rise to an early high of $23,154. Coming up short of the First Major Resistance Level (R1) at $23,220, BTC slid to a final-hour low of $22,437. BTC briefly fell through the First Major Support Level (S1) at $22,548 before ending the day at $22,627.

Binance News, Regulatory Chatter, and the NASDAQ Index Send BTC South

It was a busy Tuesday session, with US economic indicators testing buyer appetite.

While prelim PMI numbers for January beat forecasts, the latest numbers revealed a continued contraction in the private sector, leaving uncertainty over whether the Fed can avoid a hard landing. The manufacturing PMI rose from 46.2 to 46.8, with the services PMI up from 44.7 to 46.6.

Responding to the stats and corporate earnings, the NASDAQ Index fell by 0.27%, with the S&P 500 seeing a 0.07% loss. The NASDAQ mini was down 87 points this morning, signaling a bearish US session.

While US stats and the NASDAQ Composite Index influenced, Binance was back in the news, weighing on investor sentiment. News of Binance commingling customer funds with reserve funds caught investors by surprise. The latest news comes at the wrong time for investors that continue to grapple with the collapse of FTX and the Genesis bankruptcy.

In December, Binance came under pressure, with a FUD campaign and proof-of-reserve issues raising fears of a liquidity crunch. While market conditions improved this month, investor sensitivity to negative news remains.

Today, Genesis and Binance will remain in the spotlight. However, further talk of an FTX revival and upbeat US corporate earnings would deliver support. Boeing (BA), IBM (IBM), and Tesla (TSLA) are among the big names releasing earnings results today.

The Fear & Greed Index Remains Neutral Despite a Bearish BTC

Today, the BTC Fear & Greed Index slipped from 52/100 to 51/100. Despite the decline, the Index remained within the Neutral zone. BTC revisited $23,000 for the fourth consecutive session, providing support and the Index move toward the Greed zone.

Uncertainty toward the US economic outlook and Fed monetary policy has pegged the Index back. On Tuesday, the latest Binance news and the ongoing Genesis bankruptcy proceedings also left investors on a cautious footing.

Investors anticipate a material shift in the crypto regulatory landscape. More negative crypto news would incentivize US lawmakers and regulatory bodies to introduce more draconian measures to protect investors. However, a favorable outcome to the Genesis bankruptcy and an FTX revival should support an Index return to the Greed zone.

Near-term, the Index would need to return to the Greed zone (55/100) to support a BTC run at $25,000. The Index last visited the Greed zone in March 2022.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.27% to $22,566. A mixed start to the day saw BTC rise to an early high of $22,699 before falling to a low of $22,324.

Technical Indicators

BTC needs to move through the $22,739 pivot to target the First Major Resistance Level (R1) at $23,042 and the Tuesday high of $23,154. A return to $23,000 would support a bullish session. However, the crypto news wires should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,456 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $24,173.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,325 in play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,022 should limit the downside. The Third Major Support Level (S3) sits at $21,305.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $21,973. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($21,973) would support a breakout from R1 ($23,042) to target R2 ($23,456) and $23,500. However, a fall through S1 ($22,325) would give the bears a run at S2 ($22,022) and the 50-day EMA ($21,973). A fall through the 50-day EMA would signal a shift in sentiment.