BTC Fear & Greed Index Ignores the NASDAQ in Support of a Fed Pivot

Key Insights:

• On Friday, bitcoin (BTC) slipped by 0.63% to end the session at $17,137. While bearish, BTC avoided sub-$17,000 for the first time since November 7.
• US economic indicators and the NASDAQ Composite Index sent BTC into the red.
• The Fear & Greed Index rose from 26/100 to 27/100, supporting the bets of a December Fed pivot.

On Friday, bitcoin (BTC) fell by 0.63%. Partially reversing a 2.37% gain from Thursday, BTC ended the day at $17,137. Notably, BTC avoided a return to sub-$17,000 for the first time since the collapse of FTX.

A bullish morning session saw BTC rise to a mid-day high of $17,366. Coming up short of the First Major Resistance Level (R1) at $17,461, BTC fell to an early afternoon low of $17,053. However, steering clear of the First Major Support Level (S1) at $16,894, BTC revisited $17,161 before easing back.

US Economic Indicators Send BTC and the NASDAQ Index South

On Friday, uncertainty towards Wednesday’s Fed interest rate decision grew, with US wholesale inflation numbers muddying the waters.

The annual wholesale inflation rate softened from 8.1% to 7.4% in November. While softer, economists forecast a rate of 7.2%. In November, the producer price index rose by 0.3% versus a forecasted 0.2%.

The higher-than-expected headline number sent BTC to the session low before finding support from consumer sentiment figures for December.

The Michigan Consumer Sentiment Index rose from 56.8 to 59.1 in December. Significantly, the Inflation Expectations Index fell from 4.9% to 4.6%.

BTC responded to the numbers, though the wholesale inflation figures had a more lasting impact on BTC and the NASDAQ Composite Index.

The NASDAQ Composite Index and the S&P500 responded to the stats, falling by 0.70% and 0.74%, respectively.

The Fear & Greed Index Climbs Higher Despite the Bearish BTC Session

Today, the BTC Fear & Greed Index rose from 26/100 to 27/100. Significantly, the Index avoided a fall back into the Extreme Fear zone.

BTC avoided sub-$17,000 for the first time since the collapse of FTX, which likely delivered Index support.

While the US wholesale inflation figures were higher than forecasts, the downward trend supported Fed Chair Powell’s talk about easing the pace of interest rate hikes. The markets are betting on a December Fed pivot, which continues to support the Fear & Greed Index at current levels.

Near-term, avoiding sub-20/100 remains the key near-term. The bulls will need to target the pre-FTX collapse November 6 high of 40/100 to support a BTC run at $20,000.

Next week will prove pivotal, with the US CPI report, the Fed interest rate decision, and FOMC economic projections in focus.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.15% to $17,162. A range-bound start to the day saw BTC rise to an early high of $17,171 before easing back.

Technical Indicators

BTC needs to move through the $17,185 pivot to target the First Major Resistance Level (R1) at $17,318 and this week’s high of $17,436. A move through the Monday high of $17,436 would signal a bullish session.

In the event of an extended rally, BTC would likely break out from the Second Major Resistance Level (R2) at $17,498. The Third Major Resistance Level (R3) sits at $17,811.

Failure to move through the pivot would leave the First Major Support Level (S1) at $17,005 in play. Barring an extended sell-off, BTC should avoid sub-$16,750. The Second Major Support Level (S2) at $16,872 should limit the downside. The Third Major Support Level (S3) sits at $16,559.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat below the 200-day EMA, currently at $17,315. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A move through the 200-day ($17,315) and R1 ($17,318) would give the bulls a run at R2 ($17,498). However, a fall through S1 ($17,005) and the 50-day ($16,996) and 100-day ($16,964) EMAs would bring S2 ($16,872) into view.