BTC Fear & Greed Index Nears Extreme Fear on Crypto Investor Caution

Key Insights:

• On Saturday, bitcoin (BTC) rose by 0.91%. Partially reversing a 4.21% slide from Friday, BTC ended a two-day losing streak.
• Immediate fears of a Binance liquidity crunch abated as the crypto community looked to address the latest FUD campaign.
• The Fear & Greed Index slipped from 28/100 to 26/100 despite a bullish BTC session.

On Saturday, bitcoin (BTC) rose by 0.91%. Partially reversing a 4.21% slide from Friday, BTC ended the day at $16,793. Notably, BTC fell short of $17,000 for the first time since November 29.

A mixed start to the day saw BTC fall to an early low of $16,609. Steering clear of the First Major Support Level (S1) at $16,280, BTC rose to a final-hour high of $16,811. However, coming up short of the First Major Resistance Level (R1) at $17,274, BTC eased back to end the day at $16,793.

Crypto Exchange Liquidity Eased While Recession Fears Lingered

Following the Friday news of accounting firm Mazars Group ceasing crypto-related services, investor fears of a Binance liquidity crunch eased.

The crypto community looked to address the elements of the latest FUD campaign against Binance, providing BNB and broader crypto market support.

Binance CEO CZ shared a tweet from B (Da Viking) addressing the ongoing Binance FUD.

B (Da Viking) addressed four critical facts:

• The Mazars FUD.
• Claims of a Binance bank run/ insolvency.
• CZ’s $2.1 billion FTT statement on CNBC.
• BUSD.

About the Mazars FUD, B (Da Viking) highlighted that Mazars stopped all crypto audits, not just Binance. B (Da Viking) also noted that Binance currently has $55 billion + in their reserves based on on-chain data, saying that claims of a Binance bank run are ridiculous when considering the size of withdrawals versus the Binance reserves.

Binance CEO CZ followed by saying,

“FUD is temporary. Truth last.”

CZ wrapped things up by sharing a CryptoQuant.com view on Binance, which stated,

“Our analysis should not be interpreted as a favorable opinion of Binance as a company or the BSC/BNB networks. Our data merely shows that the amount of BTC Binance says it holds as liabilities at the moment the PoR Report was conducted matches our reserve data.”

However, the upside was modest, with several crypto headwinds leaving investors cautious. Fears of another exchange succumbing to a liquidity crunch, recession fears, a hawkish Fed, and regulatory uncertainty need investor consideration.

Today, the crypto news wires will likely continue to influence, with the NASDAQ mini likely to provide direction late in the session.

The Fear & Greed Index Fall to 26/100 Despite BTC Gain

Today, the BTC Fear & Greed Index fell from 28/100 to 26/100. The pullback came despite a bullish crypto session, with BTC falling short of $17,000 for the first time this month.

An increasing list of crypto headwinds likely contributed to the decline, with the fear of a Binance liquidity crunch unlikely to fade near-term. Crypto market leaders will need to restore confidence by heightened transparency to end FUD campaigns and allow the crypto market to begin the recovery from the collapse of FTX.

Significantly, the Index avoided a return to the Extreme Fear zone, indicating investor resilience despite the current headwinds.

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.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.11% to $16,774. A range-bound start to the day saw BTC fall to a low of $16,760 before steadying.

Technical Indicators

BTC needs to avoid the $16,738 pivot to target the First Major Resistance Level (R1) at $16,866. A BTC move through the Saturday high of $16,811 would signal a bullish session. However, investors will need convincing reassurances from exchanges of adequate reserves to support the continued recovery from Friday’s pullback.

In the event of an extended rally, BTC would likely break out from the Second Major Resistance Level (R2) at $16,940 to bring $17,000 into view. The Third Major Resistance Level (R3) sits at $17,142.

A fall through the pivot would bring the First Major Support Level (S1) at $16,664 into play. Barring a risk-off-fueled sell-off, BTC should avoid sub-$16,500. The Second Major Support Level (S2) at $16,536 should limit the downside. The Third Major Support Level (S3) sits at $16,334.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, BTC sat below the 100-day EMA, currently at $17,130. After Friday’s bearish cross, the 50-day EMA closed in on the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A bearish cross of the 50-day EMA through the 100-day EMA would support a fall through S1 ($16,664) to bring S2 ($16,536) into play. However, a move through R1 ($16,866) would support a breakout from R2 ($16,940) to bring the 100-day EMA ($17,130) into view.