Bitcoin Fear & Greed Index Slides into the Extreme Fear Zone

Key Insights:

• On Tuesday, bitcoin (BTC) fell by 2.38% to end the day at sub-$20,000 for the second time since July 12.
• US economic indicators brought a swift end to a bullish session, with better-than-expected numbers fueling the Fed’s monetary policy mantra.
• The Bitcoin Fear & Greed Index decreased from 27/100 to 23/100 to send the Index back into the Extreme Fear zone.

On Tuesday, bitcoin (BTC) fell by 2.38%. Partially reversing a 3.76% gain from Monday, BTC ended the day at $19,824. Notably, BTC ended the day at sub-$20,000 for only the second time since July 12.

A bullish start to the Tuesday session saw BTC rise to a mid-morning high of $20,589. Coming up short of the First Major Resistance Level (R1) at $20,629, BTC slid to a low of $19,574. BTC fell through the First Major Support Level (S1) at $19,771 before a partial recovery to $19,824.

Following the decoupling with the NASDAQ 100 on Monday, BTC and the broader crypto market succumbed to US economic indicators on Tuesday. A sharp increase in consumer confidence and higher job openings delivered another green light for the Fed to make a hawkish September policy move.

In response to the numbers, the NASDAQ 100 fell by 1.12%, with the market focus now turning to the US nonfarm payrolls on Friday.

This morning, the NASDAQ 100 Mini was up 20.0 points.

Bitcoin Fear & Greed Index Return to the Extreme Fear Zone

Today, the Fear & Greed Index fell from 27/100 to 23/100. US economic indicators weighed on investor sentiment. The better-than-expected numbers raised the prospects of more hawkish Fed moves over the remainder of the year. With the Fed concerned about the economic outlook, the Fed is likely to front-load on the policy front.

With the Index falling back into the Extreme Fear zone, the BTC current year low of $17,605 remains in play. Economic indicators from China and Friday’s nonfarm payroll figures will be two sets of numbers that investors will need to navigate.

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 0.63% to $19,948.

Technical Indicators

BTC needs to move through the $19,996 pivot to target the First Major Resistance Level (R1) at $20,417 and the Tuesday high of $20,589. BTC needs a shift in market risk sentiment to support a return to $20,500. This morning, private sector PMI numbers from China will set the tone.

An extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $21,011 and resistance at $21,500. The Third Major Resistance Level (R3) sits at $22,026.

Failure to move through the pivot would leave the First Major Support Level (S1) at $19,402 in play. Barring an extended sell-off, BTC should steer clear of sub-$19,000 and the Second Major Support Level (S2) at $18,981 should limit the downside.

The Third Major Support Level (S3) sits at $17,966.

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 $20,657.

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 ($20,417) and the 50-day EMA ($20,657) would bring R2 ($21,011) and the 100-day EMA ($21,369) 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 Sunday low of $19,540 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.