BTC Fear & Greed Returns to the Greed Zone Ahead of Powell

Key Insights:

• It was a bullish Tuesday, with BTC rising by 1.34% to end the day at $23,135.
• US economic indicators supported a bullish end to the month for the NASDAQ Index and the broader crypto market.
• The Fear & Greed Index responded to the bullish session, rising from 51/100 to 56/100.

On Tuesday, bitcoin (BTC) rose by 1.34%. Partially reversing a 3.86% slide from Monday, BTC ended the month up 39.67% to $23,135. BTC had its best month since October 2021.

A mixed start to the day saw BTC slip to an early low of $22,730. Steering clear of the First Major Support Level (S1) at $22,292, BTC rallied to a late high of $23,297. Coming up short of the First Major Resistance Level (R1) at $23,577, BTC eased back to end the session at $23,135.

US Economic Indicators Delivered Pre-Fed Support

Following the Monday reversal, investor sentiment turned to the US economic calendar on Tuesday. Softer inflation indicators supported a bullish NASDAQ Index session, with inflation and labor market conditions considerations for the Fed.

The Employment Cost Index rose by 1.0% in Q4, coming in softer than a 1.2% increase in Q3, with employment wages rising by 1.0% versus 1.3% in Q3. Inflation indicators drew more interest than an unexpected fall in consumer confidence. The CB Consumer Confidence Index fell from 109.0 to 107.1 in January.

With investors focused on the Fed, crypto market news stories took a backseat for a second session, leaving the US economic indicators and the NASDAQ to guide BTC and the broader crypto market.

On Tuesday, the NASDAQ Index rallied by 1.67% to wrap up the best January since 2001.

Today, the US economic calendar will be the focal point. US nonfarm employment change and JOLTs job openings will draw interest early in the US session. Following the stats from Tuesday, soft numbers could ease bets of a hawkish Fed Chair Powell press conference.

Late in the session, the Fed will deliver its first interest rate decision of the year. The markets expect a 25-basis point interest rate hike. However, there is uncertainty over Fed Chair Powell’s press conference. Elevated inflation and tight labor market conditions could force Powell to deliver another hawkish press conference.

Talk of needing to push rates higher to tackle elevated inflation at the expense of the US economy would weigh. However, Powell could suggest that the Fed’s efforts are having the necessary impact and that the Fed could take a less aggressive interest rate trajectory, which would support a bullish BTC response.

While the Fed will be the focal point, investors should continue monitoring the crypto news wires. SEC v Ripple, FTX, and Genesis updates need consideration, along with chatter from US lawmakers and regulators.

The Fear & Greed Index Returns to the Greed Zone Ahead of the Fed

Today, the BTC Fear & Greed Index rose from 51/100 to 61/100. US economic indicators eased bets of a hawkish Fed Chair Powell press conference, supporting the NASDAQ Index and the broader crypto market.

The Index responded with a return to the Greed zone. However, the visit to the Greed zone could be temporary should Powell talk about pushing ahead at the expense of the US economy.

Near-term, the Index needs to avoid the Fear zone to support a BTC run at $25,000. A fall into the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.07% to $23,119. A mixed start to the day saw BTC fall to an early low of $23,009 before rising to a high of $23,179.

Technical Indicators

BTC needs to avoid a fall through the $23,054 pivot to target the First Major Resistance Level (R1) at $23,378. A move through the Tuesday high of $23,297 would signal another bullish session. However, Fed Chair Powell and the NASDAQ Index need to provide support.

In the event of another bullish session, the bulls would likely test the Second Major Resistance Level (R2) at $23,621 and resistance at $24,000. The Third Major Resistance Level sits at $24,188.

A fall through the pivot would bring the First Major Support Level (S1) at $22,811 into play. However, barring a Fed-fueled crypto sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,487. The Third Major Support Level (S3) sits at $21,920.

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 $22,910. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($22,908) would support a breakout from R1 ($23,378) to target R2 ($23,621) and $24,000. However, a fall through the 50-day EMA ($22,908) would support a fall through S1 ($22,811) to give the bears a run at S2 ($22,487). A fall through the 50-day EMA would send a bearish signal.