Bitcoin Fear & Greed Index Bounces Back to 41/100 on US CPI Miss

Key Insights:

• On Wednesday, bitcoin (BTC) rallied by 3.47%, with US economic indicators delivering the crypto market a much-needed boost.
• Softer US inflation figures eased bets of a 75-basis point rate hike, driving demand for riskier assets.
• In response to the bullish session, the Bitcoin Fear & Greed Index jumped from 31/100 to 41/100 to support a BTC return to $25,000.

On Wednesday, bitcoin (BTC) rallied by 3.47%. Reversing a 2.78% fall from the previous day, BTC ended the day at $23,960.

A bearish start to the day saw BTC fall to an early low of $22,675. Finding support at the First Major Support Level (S1) at $22,717, BTC rallied to a high of $24,217. BTC broke through the First Major Resistance Level at $23,760 to end the day at $23,960.

US inflation figures delivered BTC and the broader crypto market with a breakout session. Softer inflation figures reduced the chances of a 75-basis point rate hike in September. In response to the CPIs, the market shifted bets to a 50-basis point hike, a positive for riskier assets.

With investor jitters over the US economic outlook easing and softer inflation kicking in, BTC will be looking for a return to $25,000.

Later today, US wholesale inflation and jobless claims will likely provide further direction. Steady jobless claims and softer wholesale inflation figures would be crypto-positive.

Bitcoin Fear & Greed Index Bounces Back to 41 on US CPI Numbers

Today, the Fear & Greed Index jumped from 31/100 to 41/100, reversing the Tuesday slide from 42/100 to 31/100. Market reaction to the US CPI numbers for July delivered a BTC return to $24,000 and an Index return to 41/100.

The return to 41/100 leaves the Index on the border of the Neutral zone. The Index last visited the Neutral zone on April 6. A return to Neutral would support a BTC move through $25,000 to bring $30,000 into play.

US wholesale inflation figures could deliver the Index with another boost, should the numbers come in softer.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.17% to $24,000.

A range-bound start to the day saw BTC fall to an early low of $23,953 before rising to a high of $24,021.

Technical Indicators

BTC needs to avoid the $23,619 pivot to target the First Major Resistance Level (R1) at $24,560 and the July high of $24,619.

BTC would need a bullish start to the session to support a return to $24,500.

An extended crypto rally would see BTC test resistance at $25,000 and the Second Major Resistance Level (R2) at $25,160. The Third Major Resistance Level (R3) sits at $26,701.

A fall through the pivot would bring the First Major Support Level (S1) at $23,019 in play. Barring an extended sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,075.

The Third Major Support Level (S3) sits at $20,533.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 50-day EMA, currently at $23,359.

The 50-day EMA pulled away from the 100-day EMA with the 100-day EMA widening from the 200-day EMA, the signals BTC price positive.

A 50-day EMA widening from the 100-day EMA would support a run at R1 ($24,560) to bring $25,000 into play.

However, a fall through the 50-day EMA would likely see BTC test support at the 100-day EMA ($23,080) and S1 ($23,019).

Looking at the trends, BTC would need a move through the July high of $24,619 and $25,000 to target the June high of $31,956. A BTC move through the 50-day EMA, currently at $23,265, would support a run at $24,000 and the July high of $24,619.

From $31,200, BTC should have a clear run at the May high of $40,004. BTC needs to hold above the 50-day EMA to support the near-term bullish trend.

For the bears, the June 18 low of $17,601 would be the next target, with a fall through the July low of $18,768 likely to test investor resilience.