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

Key Insights:

• On Tuesday, bitcoin (BTC) fell by a modest 0.34% to end the day at $19,063.
• Central bank policy and investor jitters ahead of tomorrow’s US CPI report weighed on riskier assets.
• The Bitcoin Fear & Greed Index succumbed to market forces, falling from 24/100 to 20/100.

On Tuesday, bitcoin (BTC) slipped by 0.34%. Following a 1.63% loss on Monday, BTC ended the day at $19,063. Notably, BTC fell short of $20,000 for the fourth consecutive session while seeing red for the sixth time in seven sessions.

After a choppy morning, BTC rose to a mid-day high of $19,260. Coming up short of the First Major Resistance Level (R1) at $19,437, BTC slid to an early afternoon low of $18,857. BTC fell through the First Major Support Level (S1) at $18,910 before a partial recovery to end the day at $19,063.

While the escalation of the war in Ukraine remained market-negative, central bank policy took center stage. On Tuesday, Bank of England Governor Andrew Bailey warned the markets that its interventions in the bond markets would end on Friday. The markets responded adversely to the comments, with the NASDAQ 100 ending the day with a 1.10% loss.

Market sentiment towards the Fed, inflation, interest rates, and the economic outlook also influenced. With the markets resigned to a 75-basis point Fed rate hike in November, the focus has shifted to December. Tomorrow’s US CPI report could increase the probability of a 75-basis point hike at the end of the year.

This morning, the probability of a 75-basis point hike in November stood at 81.3% versus 76.5% on Monday. The chances of a 75-basis point hike in December stood at 27.4%, down from 29.4% on Monday.

With the market focus on inflation, US wholesale inflation figures will draw interest later today. However, the FOMC meeting minutes and FOMC member chatter will also need monitoring, along with news from the IMF meetings.

This morning, the NASDAQ Mini was up 33.75 points, delivering early BTC price support.

The Fear & Greed Index Succumbs to Crypto Market Forces

Today, the Fear & Greed Index fell from 24/100 to 20/100. A sixth BTC loss in seven sessions led the Index deeper into the Extreme Fear zone. Recently, the Index has faced a lack of direction, reflected in BTC’s ranges.

However, avoiding sub-20/100 suggests investor resilience, though tomorrow’s US CPI report could prove pivotal.

For the bulls, the Index will need to continue avoiding sub-20/100 to support a shift in sentiment. However, a fall to sub-20/100 would signal a BTC slide to sub-$18,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.13% to $19,087. A mixed start to the day saw BTC fall to an early low of $19,025 before rising to a high of $19,117.

Technical Indicators

BTC needs to avoid the $19,060 pivot to target the First Major Resistance Level (R1) at $19,263. A BTC return to $19,200 would signal a bullish session. However, today’s US wholesale inflation numbers and the FOMC meeting minutes would need to be crypto-friendly to support a breakout.

In the case of an extended rally, BTC should move through the Second Major Resistance Level (R2) at $19,463 to target $19,500. The Third Major Resistance Level (R3) sits at $19,866.

A fall through the pivot would likely see BTC test the First Major Support Level (S1) at $18,860. Barring an extended sell-off, BTC should avoid sub-$18,500. The Second Major Support Level (S2) at $18,657 should limit the downside.

The Third Major Support Level (S3) sits at $18,254.

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 $19,443.

Following Monday’s bearish cross of the 50-day EMA through the 100-day EMA, the 50-day EMA slid back from the 100-day EMA. The 100-day EMA also fell back from the 200-day EMA to deliver bearish signals.

Following Monday’s bearish cross, BTC needs to move through R1 ($19,263) and the 50-day EMA ($19,443) to ease selling pressure. However, failure to move through the 50-day EMA ($19,443) would leave sub-$19,000 support levels in play.