BTC Fear & Greed Index Avoids Neutral Despite the Fed Hawks

Key Insights:

• It was a bearish Wednesday, with BTC falling by 1.24% to end the day at $22,957.
• Hawkish FOMC member chatter weighed on the NASDAQ Index and the crypto market.
• The Fear & Greed Index remained within the Greed zone despite falling from 58/100 to 55/100.

On Wednesday, bitcoin (BTC) fell by 1.24%. Partially reversing a 2.16% gain from Tuesday, BTC ended the day at $22,957. BTC wrapped up the day at sub-$23,000 for the third time in four sessions.

A bullish start to the day saw BTC rally to an early high of $23,430. Coming up short of the First Major Resistance Level (R1) at $23,483, BTC slid to a late afternoon low of $22,691. BTC fell through the First Major Support Level (S1) at $22,875 before wrapping up the day at $22,957.

FOMC Member Chatter and Regulatory News Weighed

On Wednesday, Fed chatter was back in the spotlight. Following Fed Chair Powell’s crypto-friendly speech on Tuesday, FOMC members Williams and Waller weighed on market risk sentiment with hawkish post-Jobs Report commentary.

FOMC member John Williams talked of a strong labor market and the need to do more to bring inflation to target. Williams reportedly said that a peak rate of 5%-5.25% is still a reasonable view that contrasted with Fed Chair Powell’s hope of rates staying below 5%.

FOMC member Christopher Waller reportedly spoke of needing to keep monetary policy tighter for longer than anticipated.

The NASDAQ Index ended the day down 1.68%, with an AI chatbot Bard-fueled slide in Alphabet Inc. (GOOGL) also a drag. This morning, the NASDAQ mini was up 38.25 points.

However, crypto market news was also bearish, with the SEC in the spotlight. Reports of the SEC investigating Kraken for the sale of unregistered securities and rumors of the SEC planning to ban crypto staking added to the bearish mood.

Today, US jobless claims will draw interest. Following the hawkish Fed chatter from Wednesday, another fall in jobless claims would fuel bets of a more aggressive Fed interest rate path to bring inflation to target. Investors should also monitor FOMC member chatter.

However, the crypto news wires will need consideration. FTX, Genesis, Silvergate Bank, and now Kraken, and the threat of a ban on crypto staking are areas of focus. Regulatory news and updates from the ongoing SEC v Ripple case would also move the dial.

The Fear & Greed Index Stays in the Greed Zone Despite BTC Pullback

Today, the BTC Fear & Greed Index remained within the Greed zone despite falling from 58/100 to 55/100. Another bearish BTC session weighed on investor sentiment, though avoiding a return to Neutral suggests investor resilience.

While hawkish Fed chatter was price-negative, an increase in regulatory activity could send the Index back to the Fear zone.

After returning to the Greed zone, the Index must avoid the Neutral zone to support a BTC run at $25,000. However, a slide into the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.16% to $22,921. A mixed start to the day saw BTC rise to an early high of $23,003 before falling to a low of $22,897.

Technical Indicators

BTC needs to move through the $23,026 pivot to target the First Major Resistance Level (R1) at $23,361 and the Wednesday high of $23,430. A move through the morning high of $23,003 would signal a breakout session. However, the crypto news wires and US stats will need to be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,765 and resistance at $24,000. The Third Major Resistance Level sits at $24,504.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,622 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,287. The Third Major Support Level (S3) sits at $21,548.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 100-day EMA ($22,775). The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering a bullish signal.

A move through the 50-day EMA ($23,102) would support a breakout from R1 ($23,361) to target R2 ($23,765) and $24,000. However, a fall through the 100-day EMA ($22,775) would bring S1 ($22,622) into view. A move through the 50-day EMA would send a bullish signal.