BTC Fear & Greed Index Suggests Investor Resilience to the Fed

Key Insights:

• On Wednesday, bitcoin (BTC) fell by 2.19% to end the day at sub-$19,000 for the second time since September 6 and just the third time since June.
• A hawkish Fed rate hike, gloomy FOMC projections, and Fed Chair Powell sent BTC into the red.
• The Bitcoin Fear & Greed Index slipped from 23/100 to 22/100, weighed by the BTC return to sub-$19,000.

On Wednesday, bitcoin (BTC) declined by 2.19%. Following a 3.37% slide on Tuesday, BTC ended the day at $18,473. BTC fell short of $20,000 for the sixth time since July 3 and wrapped up the day at sub-$19,000 for the third time since June.

After a range-bound morning session, BTC rose to a late afternoon high of $19,981 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $19,566.

However, coming up against the Second Major Resistance Level (R2) at $19,973, BTC slid to a post-Fed September low of $18,210. BTC fell through the First Major Support Level (S1) at $18,549 to test the Second Major Support Level (S2) at $18,211 before ending the day at $18,473.

BTC tracked the NASDAQ 100 throughout the US session, with a hawkish Fed rate hike doing the damage. The NASDAQ 100 fell by 1.79% as investors responded to the Fed’s 75-basis point rate hike and the promise of more.

FOMC projections were also crypto-negative, with downward revisions to growth forecasts and upward revisions to Federal Funds Rates and Inflation projections weighing.

Bitcoin Fear & Greed Index Avoids Sub-20 Despite Hawkish Fed

Today, the Fear & Greed Index slipped from 23/100 to 22/100. The Index showed a relatively muted response to the Fed and another BTC visit to sub-$19,000.

Wednesday’s FOMC projections revealed a Fed committed to bringing inflation to target at any cost. The projections aligned with the FOMC Rate Statement and Fed Chair Powell’s press conference.

For investors considering the Index as a guide, the focus will now shift to the November 2 policy move. Continued uncertainty could leave the Index at sub-30 for a prolonged period.

In recent weeks, avoiding sub-20/100 has been 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 bulls will look for an Index return to 40/100 to support a move toward $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.94% to $18,831. A mixed start to the day saw BTC fall to an early low of $18,377 before rising to a high of $18,888.

Technical Indicators

BTC needs to move through the $18,888 pivot to target the First Major Resistance Level (R1) at $19,566 and the Wednesday high of $19,981. With investor focus shifting to the November 2 policy decision, US economic indicators will influence. Today’s initial jobless claims will draw attention.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,659. The Third Major Resistance Level (R3) sits at $22,430.

Failure to move through the pivot would leave the First Major Support Level (S1) at $17,795 in play. Barring another extended sell-off, BTC should avoid sub-$17,000. The Second Major Support Level (S2) at $17,117 should limit the downside.

The Third Major Support Level (S3) sits at $15,346.

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 $19,559. The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

A move through the 50-day EMA ($19,559) and R1 ($19,566) would give the bulls a run at the 100-day EMA ($19,951) and the 200-day EMA ($20,508). However, failure to move through the 50-day EMA would leave BTC under pressure.

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 $18,210 would support a move back towards $25,000.

However, the trend has turned bearish following Wednesday’s new September low. A fall through the September low of $18,210 would bring sub-$18,000 and the June low of $17,601 into play. A Fear & Greed Index return to 30/100 should support a shift in sentiment.