Bitcoin (BTC) Fear & Greed Index Hits Reverse as Risk Aversion Spreads

Key Insights:

• Bitcoin (BTC) slid by 4.33% on Monday to record a fourth consecutive day in the red.
• Investor sentiment towards the global economic outlook, inflation, and Fed monetary policy continued to weigh following Sunday’s pullback.
• The Bitcoin Fear & Greed Index hit reverse, falling from 22/100 to 16/100 this morning.

On Monday, bitcoin (BTC) slid by 4.33%. Following a 3.41% decline on Sunday, bitcoin ended the day at $19,944.

Bearish throughout the session, BTC fell from an early high of $20,852 to a late low of $19,872.

The reversal saw BTC slide through the First Major Support Level at $20,481 and the Second Major Support Level at $20,115 to end the day at sub-$20,000 for the first time since June 3. The Monday reversal also marked a fourth consecutive day in the red.

There were no economic indicators or crypto news updates to drive the sell-off. Market angst over Fed monetary policy and the economic outlook weighed ahead of US inflation figures due tomorrow.

Risk aversion spread from the global equity markets, with bitcoin tracking the NASDAQ 100 into the red. On Monday, the NASDAQ 100 slid by 2.26%.

At the time of writing, the NASDAQ 100 Mini was down 20 points.

Bitcoin Fear & Greed Index Slides back to 16/100

This morning, the Fear & Greed Index slid from 22/100 to 16/100. Risk aversion spread across the global financial markets, leading to increased fear of another BTC sell-off.

Significantly, the Index failed to continue an upward move into the “Fear” zone, last visited on May 5, when bitcoin stood at $36,630.

Failure to return to 20/100 will likely leave bitcoin under increased selling pressure. However, the near-term path will likely hinge on US economic indicators, including inflation and retail sales figures due out this week.

A return to the “Fear” zone would reflect a shift in investor sentiment.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.65% to $19,815.

A range-bound start to the day saw BTC rise to an early high of $19,984 before falling to a low of $19,798.

Technical Indicators

BTC needs to move through the $20,224 pivot to target the First Major Resistance Level (R1) at $20,571 and test resistance at the Monday high of $20,852.

BTC would need a bullish session to support a return to $20,500.

An extended rally would test the Second Major Resistance Level (R2) at $21,203 and resistance at $21,500. The Third Major Resistance Level (R3) sits at $22,183.

Failure to move through the pivot would bring the First Major Support Level (S1) at $19,592 into play.

Barring an extended sell-off, BTC should avoid sub-$19,000, with the Second Major Support Level (S2) at $19,242 likely to limit the downside.

The Third Major Support Level (S3) sits at $18,263.

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 $20,681.

The 50-day EMA slipped back from the 100-day EMA. The 100-day EMA eased back from the 100-day EMA; bitcoin price negative.

A further pullback of the 50-day EMA from the 100-day EMA would  test support at $19,000.

However, a bullish cross of the 50-day EMA through the 100-day EMA would support a breakout from R1 and the 50-day EMA to bring the 100-day EMA and R2 into play. The 100-day EMA currently sits at $20,822.

On a trend analysis basis, bitcoin would need a move through a May 30 high of $32,503 to target the March 28 high of $48,192. Near-term, resistance at $25,000 will likely be the first test should the upward trend resume.