Bitcoin (BTC) Fear & Greed Index Slides Back into the Extreme Fear Zone

Key Insights:

• On Sunday, bitcoin (BTC) fell by 2.36% to end the day at sub-$20,000 for the first time since July 12.
• Fed Chair Powell continued to weigh on the crypto market, with selling pressure intensifying in the final hour of the Sunday session.
• The Bitcoin Fear & Greed Index slid back into the Extreme Fear zone, with a decline to 24/100.

On Sunday, bitcoin (BTC) fell by 2.36%. Following a 1.03% decline on Saturday, BTC ended the week down by 9.03% to $19,571.

Range-bound through most of the session, BTC rose to an early high of $20,169 before falling back to sub-$20,000. However, a final hour sell-off saw BTC slide to a low of $19,540 before ending the day at $19,571.

While leaving the Major Resistance Levels untested, the final hour sell-off saw BTC fall through the First Major Support Level at $19,753.

Fed Chair Powell’s speech from Jackson Hole continued to test investor sentiment. There was no crypto news to provide investors with distraction ahead of the US market opening bell.

On Friday, Fed Chair Powell warned the markets of the Fed’s commitment to bring inflation to target. Powell talked of the likely fallout from the Fed’s goal, including the impact on labor market conditions. The Fed Chair removed any hope of a policy reversal by highlighting the need for a period of sustained below-trend growth alongside a weaker labor market to tame inflation.

In the final hour of the Sunday session, the NASDAQ 100 Mini sent BTC deeper into the red. This morning, the NASDAQ 100 Mini was down 184 points, pointing to another bearish US session, a negative for BTC.

Bitcoin Fear & Greed Index Slides Back into the Extreme Fear Zone

Today, the Fear & Greed Index fell from 28/100 to 24/100. After showing resilience on Saturday and Sunday, the BTC return to sub-$20,000 weighed on investor sentiment, leading the Index back into the Extreme Fear zone.

For the bulls, the Index needs a move through 40/100 to support a BTC return to $25,000. However, the fall into the Extreme Fear zone leaves a BTC visit to the 2022 low of $17,605 in play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.10% to $19,590.

Technical Indicators

BTC needs to move through the $19,760 pivot to target the First Major Resistance Level (R1) at $19,980 and the Sunday high of $20,169.

BTC would need a marked shift in investor sentiment to support a return to $20,000.

An extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $20,389 and resistance at $20,500. The Third Major Resistance Level (R3) sits at $21,018.

Failure to move through the pivot would bring the First Major Support Level (S1) at $19,351 into play. Barring an extended sell-off, BTC should steer clear of sub-$19,000. The Second Major Support Level at $19,131 should limit the downside.

The Third Major Support Level (S3) sits at $18,502.

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 $20,996.

The 100-day EMA pulled back from the 200-day EMA, with the 50-day EMA falling back from the 200-day EMA, delivering bearish price signals.

A further pullback of the 50-day EMA from the 200-day EMA would bring the Major Support levels into play.

For the bulls, a BTC move through R1 ($19,980) and R2 ($20,389) would bring the 50-day EMA ($20,996) and R3 ($21,018) into view.

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 the Saturday low of $19,773 would support a move back towards the 50-day EMA to ease selling pressure.

For the bears, Sunday’s August low of $19,540 continued a trend of new lows, with the June 18 low of $17,601 remaining the target. A fall through the July low of $18,768 would bring the June and 2022 low into play.