BTC Fear & Greed Index Tracks the NASDAQ to Signal a Bullish Saturday

Key Insights:

• On Friday, bitcoin (BTC) slipped by 0.21% to end the day at $16,802.
• US economic indicators and the NASDAQ Index left BTC in a tight range through the afternoon session.
• The Fear & Greed Index rose from 27/100 to 29/100, signaling a bullish session ahead.

On Friday, bitcoin (BTC) fell by 0.21%. Following a 0.04% fall on Thursday, BTC ended the day at $16,802. Notably, BTC failed to revisit $17,000 for the third consecutive session while extending its losing streak to three.

After a range-bound morning session, BTC fell to an early afternoon low of $16,770 before striking an early afternoon high of $16,966. The movement came in response to US economic indicators that showed the early effects of the Fed’s aggressive monetary policy moves.

The range-bound session left the Major Support and Resistance Levels untested, with BTC recovering from the session lows to wrap up the day at $16,802.

US Economic Indicators and the NASDAQ Index Send Mixed Signals

On Friday, US economic indicators revealed a cooling US economy and a softer inflationary environment, while consumer confidence trended higher.

Personal spending increased by just 0.1%, while personal income rose by 0.4%. Durable goods orders fell by 2.1% in November, reversing a 0.7% increase in October.

The weak personal spending numbers showed consumers tightening their purse strings because of increasing economic uncertainty.

However, inflation figures were BTC-friendly. The all-important Core PCE Price Index was up 4.7% year-over-year in November versus 5.0% in October, with the Michigan Inflation Expectations Index down from 4.6% to 4.4%.

The decline in inflation expectations contributed to a pickup in consumer sentiment, with the Michigan Consumer Sentiment Index rising from 56.8 to 59.7 in December. The NASDAQ Index responded to the numbers, rising by 0.21%, with the S&P 500 gaining 0.59%.

Considering the weak personal spending and softer inflation numbers, the Fed may be able to take a less aggressive interest rate trajectory. However, with the US unemployment rate at 3.7%, well below the Fed’s 5.0% target, another 50-basis point rate hike remains on the table.

This weekend, investors should monitor the crypto news wires, with FTX and regulatory chatter being the market focal point. Barring a crypto market event, it will likely be another range-bound session, with volumes declining ahead of the holidays.

The Fear & Greed Index Climbs to 29/100 Despite the BTC Decline

Today, the BTC Fear & Greed Index rose from 27/100 to 29/100, supported by a bullish NASDAQ Index.

While US economic indicators sent mixed signals, the consensus is that the Fed’s monetary policy moves are beginning to take effect, which should support the Fed doves ahead of the February interest rate decision.

Investors continue to hope for an economic soft landing, supporting BTC and the broader crypto market going into 2023.

Avoiding sub-20/100 remains the key near-term. The bulls will need to target the pre-FTX collapse November 6 high of 40/100 to support a BTC run at $20,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.20% to $16,835. A bullish start to the day saw BTC rise from an early low of $16,802 to a high of $16,849.

Technical Indicators

BTC needs to move through the $16,846 pivot to target the First Major Resistance Level (R1) at $16,922. A BTC return to $16,900 would signal a bullish session. However, the crypto news wires need to be crypto-friendly to support a breakout session.

In the event of an extended rally, BTC would test the Second Major Resistance Level (R2) at $17,042 before any pullback. The Third Major Resistance Level (R3) sits at $17,238.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,726 in play. Barring a risk-off-fueled sell-off, BTC should avoid sub-$16,500. The Second Major Support Level (S2) at $16,650 should limit the downside. The Third Major Support Level (S3) sits at $16,454.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, BTC sat below the 50-day EMA, currently at $16,891. 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 signals.

A move through the 50-day ($16,891) would support a breakout from R1 ($16,922) and the 100-day ($16,960) to target R2 ($17,042). However, failure to move through the 50-day EMA ($16,891) would leave BTC under pressure.