Bitcoin Fear & Greed Index Slides into the Extreme Fear Zone

Key Insights:

• On Tuesday, bitcoin (BTC) joined the broader crypto market in positive territory.
• US economic indicators eased fears of a hawkish Fed Chair Powell speech from Jackson Hole, delivering support early in the US session.
• The Bitcoin Fear & Greed Index fell from 28/100 to 25/100, supporting a BTC return to sub-$20,000.

On Tuesday, bitcoin (BTC) rose by 0.57%. Reversing a 0.55% decline from Monday, BTC ended the day at $21,519.

Tracking the broader crypto market, BTC fell through the First Major Support Level (S1) at $21,023 to a mid-morning low of $20,908 before making a move. Finding late morning support, BTC struck a day high of $21,685 before easing back.

BTC briefly broke through the First Major Resistance Level (R1) at $21,652.

US economic indicators are in the spotlight ahead of this week’s Jackson Hole Symposium. With the global financial markets looking ahead to Fed Chair Powell’s Friday speech, crypto market sensitivity to US stats has increased.

Weak private sector PMIs eased market fear of a hawkish Fed Chair. A sharp contraction in the all-important services sector should limit the Fed’s wriggle room to tackle inflation near term.

While the threat of a US recession is crypto market negative, a hawkish Fed on an aggressive rate path trajectory seems of more concern when judging the market reaction to the stats.

Despite sentiment towards the economy and monetary policy, the NASDAQ 100 ended the day flat, another crypto positive.

This morning, the NASDAQ 100 Mini was 41.25 points to deliver early BTC support. Following the private sector PMIs, US core durable goods and durable goods orders will be the focal point today.

Bitcoin Fear & Greed Index Slides into the Extreme Fear

Today, the Fear & Greed Index fell from 28/100 to 25/100. The latest decline reaffirmed the downward trend from an August 14 high of 47/100, with the Index falling into the Extreme Fear zone. The fall into the Extreme Fear zone and downward trend suggest further BTC downside over the near term.

The Index needs a move through 40/100 to support a BTC return to $25,000. However, the fall into the Extreme Fear zone could see BTC at sub-$20,000 to give the bears a look at the current year’s low of $17,605.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.16% to $21,553.

Technical Indicators

BTC needs to avoid the $21,371 pivot to target the First Major Resistance Level (R1) at $21,833.

BTC would need a bullish morning session to support a breakout from the Tuesday high of $21,685.

An extended crypto rally would see BTC test resistance at $22,000 and the Second Major Resistance Level (R2) at $22,148. The Third Major Resistance Level (R3) sits at $22,925.

A fall through the pivot would bring the First Major Support Level (S1) at $21,056 into play. Barring another extended sell-off, BTC should steer clear of sub-$20,500. The Second Major Support Level at $20,594 should limit the downside. The Third Major Support Level (S3) sits at $19,817.

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 $22,080.

Following Monday’s bearish cross, the 100-day EMA pulled back from the 200-day EMA, with the 50-day EMA sliding 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 sub-$20,000 into play.

For the bulls, a BTC move through R1 ($21,833) would bring the 50-day EMA ($22,080) and R2 ($22,148) 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 most recent low of $20,769 would support a move through the 50-day EMA to ease selling pressure.

For the bears, the June 18 low of $17,601 remains the target. A fall through $20,000 and the July low of $18,768 would likely test investor resilience.

Working on Bitcoin Fear & Greed Index – Review of price action from Day prior and key drivers – link to NASDAQ – Fear & Greed Index trends – BTC price action for the day ahead – This includes resistance pivot and support, EMAs, and Trend analysis.