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BTC Fear & Greed Index Exits Extreme Fear on Signs of BTC Bottom

By:
Bob Mason
Updated: Oct 6, 2022, 11:18 GMT+00:00

BTC saw red on Wednesday, with US economic indicators weighing. However, the Fear & Greed Index suggests a shift in crypto investor sentiment.

BTC Tech Analysis - FX Empire

Key Insights:

  • On Wednesday, bitcoin (BTC) ended a bullish two days with a modest 0.92% loss.
  • US economic indicators raised bets of a hawkish Fed policy move in November, which weighed on riskier assets.
  • However, the Bitcoin Fear & Greed Index moved out of the Extreme Fear zone with an increase from 25/100 to 26/100.

On Wednesday, bitcoin (BTC) fell by 0.92%. Partially reversing a 3.63% rally from Tuesday, BTC ended the day at $20,156. Notably, BTC held onto the $20,000 handle for the second time since September 17.

A mixed start to the day saw BTC rise to an early high of $20,363. Falling short of the First Major Resistance Level (R1) at $20,757, BTC slid to an early afternoon low of $19,750. However, coming within range of the First Major Support Level (S1) at $19,716, BTC bounced back to end the day at $20,156.

BTC tracked the NASDAQ throughout the US session, with both markets responding to US economic indicators on the day.

According to the ADP, nonfarm employment increased by 208k in September, up from 185k in August. In September, the ISM Non-Manufacturing PMI slipped from 56.9 to 56.7. Notably, the ISM Non-Manufacturing Employment sub-index increased from 50.2 to 53.0, with new orders rising at a solid clip.

The employment numbers reversed views that labor market conditions were loosening, supporting a more hawkish Fed. FOMC member Mary Daly delivered a hawkish message on Wednesday by reemphasizing the Fed’s commitment to bringing inflation to target.

On Wednesday, the NASDAQ 100 fell by 0.25% to end a mini two-day winning streak. This morning, the NASDAQ 100 Mini was up 67.75 points.

Later today, US jobless claims and Fed chatter will influence as the markets prepare for the nonfarm payroll numbers on Friday.

NASDAQ correlation.
NASDAQ – BTCUSD 061022 5 Minute Chart

Bitcoin Fear & Greed Index Exits the Extreme Fear Zone

Today, the Fear & Greed Index rose from 25/100 to 26/100. Despite a bearish BTC session, a BTC return to $20,000 supported the move out of the Extreme Fear zone. The Index last sat outside of the Extreme Fear zone on September 18.

Fear & Index historical chart.
Fear & Greed 061022 Chart

Notably, the move came amidst increasing bets of a 75-basis point Fed rate hike in November.

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.

Fear & Greed Index leaves the Extreme Fear zone.
Fear & Greed 061022

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.95% to $20,347. A bullish start to the day saw BTC rise from an early low of $20,151 to a high of $20,455.

BTC tested the First Major Resistance Level (R1) at $20,429 before easing back.

BTC finds support.
BTCUSD 061022 Daily Chart

Technical Indicators

BTC needs to avoid the $20,090 pivot to retarget the First Major Resistance Level (R1) at $20,429 and resistance at $20,500. A BTC move through $20,500 would signal a bullish session.

In the case of another extended rally, BTC should test the Second Major Resistance Level (R2) at $20,703 and resistance at $21,000. The Third Major Resistance Level (R3) sits at $21,316.

A fall through the pivot would bring the First Major Support Level (S1) at $19,816 into play. Barring an extended sell-off, BTC should avoid sub-$19,500 and the Second Major Support Level (S2) at $19,477. However, positive US weekly jobless claims figures and hawkish Fed chatter would pressure BTC later today.

The Third Major Support Level (S3) sits at $18,864.

BTC resistance levels in play above the pivot.
BTCUSD 061022 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. This morning, bitcoin sat above the 200-day EMA, currently at $19,920.

After the 50-day EMA bullish cross through the 100-day EMA, the 50-day EMA pulled away from the 100-day EMA. The 100-day EMA narrowed to the 200-day EMA, delivering bullish price signals.

A bullish cross of the 50-day EMA through the 200-day EMA would support a breakout from R1 ($20,429) to target R2 ($20,703) and $21,000. However, a fall through the 200-day EMA ($19,920) would give the bears a run at S1 ($19,816) and the 50-day ($19,653), and the 100-day ($19,619) EMAs.

EMAs bullish.
BTCUSD 061022 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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