BTC Fear Index Avoids Sub-20 as BTC Ignores the NASDAQ and Contagion

Key Insights:

• On Thursday, bitcoin (BTC) rose by 0.17%. Marking the fourth gain from twelve sessions, BTC ended the day at $16,683.
• FTX contagion risk continued to weigh, with hawkish Fed chatter adding to the bearish mood.
• However, the Bitcoin Fear & Greed Index rose from 20/100 to 23/100. BTC avoided sub-$16,000, suggesting a possible bottom.

On Thursday, bitcoin (BTC) rose by 0.17%. Partially reversing a 1.37% loss from Wednesday, BTC ended the day at $16,683. Notably, BTC logged the fourth gain from twelve sessions while falling short of $17,000 for the second time since the collapse of FTX.

A bullish start to the day saw BTC rise to an early high of $16,735. BTC broke through the First Major Resistance Level (R1) at $16,988 before falling to an early afternoon low of $16,410. Steering clear of the First Major Support Level (S1) at $16,33, BTC found late support to wrap up the day in positive territory.

Hawkish Fed chatter weighed on investor sentiment. FOMC member Bullard highlighted that Fed rate hikes have only had a limited impact on inflation, suggesting the need for more aggressive policy moves.

However, disappointing US economic indicators provided late support and a reversal of losses from the day. In November, the Philly Fed Manufacturing Index fell from -8.7 to -19.4, with the Employment Index sliding from 28.5 to 7.1.

Correlation with the NASDAQ Composite Index was evident throughout the US session. For investors, there are no US economic indicators or FOMC member speeches to consider today. The quiet US economic calendar will leave BTC in the hands of Fed chatter with the media, FTX contagion news, and the NASDAQ. This morning, the NASDAQ mini was up 27.75 points.

The Fear & Greed Index Avoids Sub-20 on BTC Price Stabilization

Today, the Fear & Greed Index rose from 20/100 to 23/100. Investor sentiment failed to deteriorate despite negative FTX news flooding the crypto news wires.

BTC avoided sub-$16,000 for a third consecutive session, suggesting a possible price bottom. However, investor sentiment will likely remain contagion news dependent over the near term.

Barring adverse news, an Index return to the Fear zone would signal a BTC return to $20,000. The Index would need to avoid sub-20/100 to support an Index return to 40 and a move into the neutral zone. However, a fall to sub-20/100 would see BTC face the risk of sub-$10,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.11% to $16,868. A bullish start to the day saw BTC rise from an early low of $16,673 to a high of $16,977.

BTC broke through the First Major Resistance Level (R1) at $16,809 and briefly through the Second Major Resistance Level (R2) at $16,934.

Technical Indicators

BTC needs to hold above R1 and the $16,609 pivot to retarget the Second Major Resistance Level (R2) at $16,934. A move back through R2 and a return to $17,000 would bring the Third Major Resistance Level (R3) at $17,259 into view.

We will expect FMOC member chatter and the NASDAQ Composite Index to influence alongside the crypto news wires.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $16,484 into play. Barring another extended sell-off, BTC should avoid sub-$16,000. The Second Major Support Level (S2) at $16,284 should limit the downside. However, negative FTX-related news could send BTC to sub-$16,000.

The Third Major Support Level (S3) sits at $15,959.

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 $17,157. The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA sliding back from the 200-day EMA, delivering bearish signals.

A move through R2 ($16,934) would give the bulls a run at the 50-day EMA ($17,157) and R3 ($17,259). However, failure to move through the 50-day EMA would leave BTC under pressure and S1 ($16,484) in view.