BTC Fear & Greed Index Enters the Greed Zone on Bullish BTC Sentiment

Key Insights:

• It was a bearish Thursday, with BTC falling by 0.22% to end the day at $23,004.
• FTX updates and US economic indicators weighed on BTC and the broader crypto market, which continued to decouple from the NASDAQ Index.
• However, the Fear & Greed Index rose from 54/100 to 55/100 and entered the Greed zone for the first time since March 2022.

On Thursday, bitcoin (BTC) slipped by 0.22%. Partially reversing a 1.89% gain from Wednesday, BTC ended the day at $23,004. Notably, BTC held onto the $23,000 handle for the second time since August 18.

A bullish start to the day saw BTC rise to an early high of $23,273. Coming up short of the First Major Resistance Level (R1) at $23,803, BTC slid to a late afternoon low of $22,853. However, steering clear of the First Major Support Level (S1) at $22,315, BTC revisited $23,148 before easing back into the red.

FTX Creditor List Spooks Crypto Investors

It was a busier day on the US economic calendar, with US GDP and jobless claims figures in focus. Better-than-expected numbers weighed on investor sentiment, with initial jobless claims falling unexpectedly from 192k to 186k. In Q4, the US economy expanded by 2.9%, according to prelim figures, down marginally from 3.2% in Q3.

The latest numbers showed that the US economy faired better than previously anticipated but faces the risk of an economic contraction. US retail sales figures for November and December painted a grim outlook. In December, retail sales slid by 1.1%, following a 1.0% decline in November.

In response to the stats, the NASDAQ Composite Index rallied by 1.76%, with US corporate earnings supporting a bullish session. Tesla Inc (TSLA) reported record revenue to support the NASDAQ rally. This morning, the NASDAQ mini was down 80 points, weighing on BTC and the broader crypto market.

While US economic indicators and corporate earnings delivered NASDAQ support, the crypto news wires left BTC and the broader crypto market on the defensive.

On Thursday, FTX was in the spotlight. The release of a 116-page FTX creditor list drew investor interest. While FTX cash & cash equivalents and non-strategic assets may make creditors whole, the list delivered investors a reality check, with Apple Inc (AAPL) among the long list of creditors.

Significantly, the list will give US lawmakers and regulators reasons to introduce tight regulatory controls to limit the impact of the crypto market on corporate America and more traditional asset classes.

Today, US economic indicators will draw interest again, with personal spending and inflation in the spotlight. A pickup in spending and inflation would test buyer appetite.

However, investors need to continue monitoring the crypto news wires. Updates from FTX and Genesis bankruptcy proceedings will remain the key drivers, with regulatory chatter likely to draw interest after the release of the FTX creditor list.

The Fear & Greed Index Enters the Greed Zone

Today, the BTC Fear & Greed Index rose from 54/100 to 55/100. Despite a bearish BTC session, the Index entered the Greed zone for the first time since March 2022. The move signals a near-term BTC return to $25,000.

While bearish, BTC held onto the $23,000 handle for the second consecutive session, supporting the Index’s move into the Greed zone. Easing FTX and Genesis contagion risk continued delivering support.

However, regulatory risk remains a headwind. The latest FTX list raises the threat of draconian-style measures to regulate the digital asset space.

Near-term, the Index needs to remain within the Greed zone (55/100) to support a BTC run at $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.83% to $22,812. A bearish start to the day saw BTC fall from an early high of $23,061 to a low of $22,533. BTC fell through the First Major Support Level (S1) at $22,814 and briefly through the Second Major Resistance Level (S2) at $22,623.

Technical Indicators

BTC needs to move through S1 and the $23,043 pivot to target the First Major Resistance Level (R1) at $23,234 and the Thursday high of $23,273. A return to $23,000 would support a bullish session. However, the crypto news wires and US economic indicators should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,463 and resistance at $23,500. The Third Major Resistance Level (R3) sits at $23,883.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $22,623 in play. Barring a broad-based crypto sell-off, BTC should avoid sub-$22,500 and the Third Major Support Level (S3) at $22,203.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,327. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S2 ($22,623) and the 50-day EMA ($22,327) would support a breakout from S1 ($22,814) to target R1 ($23,234). However, a fall through S2 ($22,623) would give the bears a run at the 50-day EMA ($22,327) and S3 ($22,203). A fall through the 50-day EMA would send a bearish signal.