BTC Fear & Greed Index Hits Reverse Ahead of Fed Chair Powell’s Speech

Key Insights:

• It was a bullish but choppy Wednesday, with Bitcoin (BTC) falling to a September low of $18,549 before wrapping up the day at $19,285.
• Fed fear subsided despite hawkish FOMC member chatter, with the NASDAQ 100 delivering BTC and the broader market support.
• The Bitcoin Fear & Greed Index fell from 24/100 to 20/100, signaling a BTC return to sub-$18,000.

On Wednesday, bitcoin (BTC) rose by 2.61%. Partially reversing a 5.03% from Tuesday, BTC ended the day at $19,285. Significantly, while BTC bounced back from a new low, the pullback to sub-$19,000 brings the 2022 low of $17,601 into view.

A bearish start to the day saw BTC slide to a new September low of $18,549. However, avoiding the First Major Support Level (S1) at $18,252, BTC rallied to a late high of $19,463. Coming up short of the First Major Resistance Level (R1) at $19,760, BTC eased back to end the day at sub-$19,300.

There were no crypto market events to fuel the BTC rebound, leaving BTC in the hands of the NASDAQ 100. There were also no US economic indicators to spook investors. On Wednesday, the NASDAQ 100 rallied by 2.14%, with falling yields driving demand for riskier assets.

The pickup in demand came despite hawkish FOMC member chatter throughout the US session. FOMC member Loretta Mester talked of a further uptick in inflation, with Thomas Barkin and Lael Brainard voicing the need to hike rates until there are signs of softer inflationary pressures.

This morning, the NASDAQ 100 mini is down 4.75 points. While the global financial markets ignored hawkish FOMC member chatter on Wednesday, investors are unlikely to brush aside Fed Chair Powell’s speech later today.

Bitcoin Fear & Greed Index Slides to-20/100 Despite BTC Rebound

Today, the Fear & Greed Index fell from 24/100 to 20/100. The downside came despite the BTC recovery from a new September low. The fall deeper into the Extreme Fear zone leaves the current year low of $17,605 in play.

20/100 remains a key level, with an Index decline to sub-20 likely to bring sub-$18,000 into play. For the bulls, the Index needs a move through 40/100 to support a BTC return to $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.36% to $19,356. A mixed start to the day saw BTC fall to an early low of $19,281 before rising to a high of $19,360.

Technical Indicators

BTC needs to avoid the $19,099 pivot to target the First Major Resistance Level (R1) at $19,649 and resistance at $20,000. However, Fed Chair Powell will need to tow a more dovish line to support BTC at current levels.

An extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $20,013 and resistance at $20,500. The Third Major Resistance Level (R3) sits at $20,927.

A fall through the pivot would bring the First Major Support Level (S1) at $18,735 into play. A hawkish Fed Chair and positive US jobless claims figures would support a BTC sell-off. Another extended sell-off could see BTC test the Second Major Support Level (S2) at $18,185 and support at $18,000.

The Third Major Support Level (S3) sits at $17,271.

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 $19,719.

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.

Following the Tuesday fallback through the 50-day EMA, sub-$18,000 and the 2022 low of $17,601 remain in view. However, a move through R1 ($19,649) and the 50-day EMA ($19,719) would ease selling pressure. The 200-day EMA sits at $21,116.

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 August low of $19,540 would support a move back towards the 50-day EMA to ease selling pressure.

However, BTC recorded a second consecutive September low, suggesting more losses before any sustainable recovery. A fall through the September low of $18,549 would bring sub-$18,000 and the June 18 low of $17,601 into play.