BTC Fear & Greed Index Sends Bearish Signal on Fed Fear and G20 Plans

Key Insights:

• It was a bullish Sunday, with BTC rising by 1.65% to end the day at $23,561.
• Dip buyers ended the five-day losing streak with no crypto events or external market forces to weigh on buyer appetite.
• Despite the bullish session, the Fear & Greed Index fell from 51/100 to 50/100.

On Sunday, bitcoin (BTC) rose by 1.65%. Reversing a 0.09% loss from Saturday, BTC ended the week down 2.98% to $23,561. BTC ended the five-day losing streak while falling short of the $24,000 handle for the second consecutive session.

A mixed start to the day saw BTC fall to an early morning low of $23,083. Steering clear of the First Major Support Level (S1) at $22,918, BTC rallied to a late high of $23,673 before easing back. BTC broke through the First Major Resistance Level (R1) at $23,331 and the Second Major Resistance Level (R2) at $23,483 to end the day at $23,561.

The Third Major Resistance Level (R3) at $23,619 capped the upside.

Dip Buyers Brushed Aside G20 Updates

There were no crypto news events to influence investor sentiment on Sunday. The lack of news left dip buyers to deliver support. However, the upside was modest, with lingering crypto market headwinds testing buyer appetite.

Fed Fear and regulatory uncertainty left BTC short of the $24,000 handle over the weekend. The latest US inflation numbers raise the prospects of a more aggressive Fed interest rate trajectory that could send the US economy into a recession.

Updates from the G20 delivered regulatory uncertainty, with the G20 tasking the Bank for International Settlements (BIS), the Financial Stability Board (FSB), and the International Monetary Fund (IMF) to initiate a global regulatory framework.

The G20’s decision to move ahead with a global regulatory framework rather than pursue a ban on cryptos was market positive. However, the involvement of the IMF in establishing a global crypto regulatory framework could be of concern. At the G20, IMF Managing Director suggested banning crypto should be an option.

The Day Ahead

US regulatory activity and US lawmaker chatter will need continued monitoring. Investors should also track the crypto news wires for Binance and FTX updates and SEC v Ripple news that could move the dial.

In the afternoon session, US economic indicators, Fed chatter, and the NASDAQ Composite Index will also provide direction. Fed chatter will likely have more impact on buyer appetite as investors look for further reaction to the latest US inflation numbers. The NASDAQ mini was up 30.5 points this morning.

The Fear & Greed Index Falls Despite a Bullish BTC Session

Today, the BTC Fear & Greed Index fell from 51/100 to 50/100. Significantly, the Index avoided a return to the Fear zone. Crypto market headwinds likely weighed on investor sentiment, with Fed monetary policy and regulatory risk in focus.

After falling into the Neutral zone, the Index must return to the Greed zone to support a BTC breakout from $25,000 to target $30,000. However, an Index return to the Fear zone would signal a near-term bullish trend reversal.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.47% to $23,451. A mixed start to the day saw BTC rise to an early high of $23,564 before falling to a low of $23,450.

Technical Indicators

BTC needs to avoid the $23,439 pivot to target the First Major Resistance Level (R1) at $23,795. A move through the Sunday high of $23,673 would signal a breakout session. The crypto news wires and Fed chatter should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $24,029. The Third Major Resistance Level (R3) sits at $24,619.

A fall through the pivot would bring the First Major Support Level (S1) at $23,205 into play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$22,500. The Second Major Support Level (S2) at $22,849 should limit the downside.

The Third Major Support Level (S3) sits at $22,259.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 100-day EMA ($23,528). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day ($23,528) and 50-day ($23,663) EMAs would support a breakout from R1 ($23,795) to target R2 ($24,029). However, a fall through S1 ($23,205) would give the bears a run at the 200-day EMA ($22,884) and S2 ($22,849). A move through the 50-day EMA ($23,663) would send a bullish signal.