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BTC Fear & Greed Index Signals a Bullish Start to 2023

By:
Bob Mason
Updated: Jan 1, 2023, 07:57 GMT+00:00

Following a dire 2023, investors will be looking to turn the page. The BTC Fear & Greed Index crawled out of the Extreme Fear zone today to provide support.

BTC Technical Analysis - FX Empire

In this article:

Key Insights:

  • It was a bearish end to 2022, with BTC falling by 0.32% to end the year at $16,564.
  • There were no economic indicators or crypto events to influence, leaving bearish sentiment towards the Fed and fears of a recession to peg BTC back.
  • The Fear & Greed Index rose from 25/100 to 26/100, signaling a departure from the extreme fear zone at the turn of the year.

On Saturday, bitcoin (BTC) fell by 0.32%. Following a 0.24% decline on Friday, BTC ended the day at $16,564. Notably, BTC failed to revisit $17,000 for the eleventh consecutive session while avoiding sub-$16,500.

After a range-bound morning, BTC rose to an early afternoon high of $16,664 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $16,737, BTC fell to a late low of $16,507. However, steering clear of the First Major Support Level (S1) at $16,428, BTC found late support to end the day at $16,564.

Crypto Market Headwinds Leave BTC in a Bearish Mood

There were no economic indicators or crypto events to influence on Saturday, leaving BTC in another range-bound session.

BTC tumbled by 64.15% in 2022 versus a 33.5% NASDAQ Index slump, with the collapse of Terra Labs and FTX separating the two. However, crypto headwinds accumulated throughout the year, with regulatory and contagion risks adding to the bearish mood.

Today, investors will be looking for a fresh start. However, Fed fear will likely linger, as will recession jitters and uncertainty toward the regulatory landscape. A Ripple victory in the SEC v Ripple case would ease some of the market angst though investors may have to wait for pivotal court rulings that could thaw the crypto winter.

With the global financial markets also closed tomorrow, trading volumes will likely sit on the lower side. However, investors should continue monitoring the crypto news wires for events that could move the dial. Contagion from the crypto winter and the collapse of FTX remain focal points.

The Fear & Greed Index Exits the Extreme Fear Zone

Today, the BTC Fear & Greed Index rose from 25/100 to 26/100. Significantly, the Index crawled out of the Extreme Fear zone, signaling a positive start to 2023.

While the Index moved out of the Extreme Fear zone, the current level reflects investor uncertainty over what lies ahead. The NASDAQ Index had its worst year since the global financial crisis, with the outlook for 2023 uncertain. Uncertainty will continue to peg the Index back from a move into the Neutral zone over the 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.

Fear & Greed Index signals a bullish session
Fear & Greed 010123

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.04% to $16,571. A range-bound start to the day saw BTC fall to an early low of $16,541 before rising to a high of $16,571.

BTC holds steady.
BTCUSD 010123 Daily Chart

Technical Indicators

BTC needs to move through the $16,578 pivot to target the First Major Resistance Level (R1) at $16,650 and the Saturday high of $16,664. A return to $16,650 would signal a bullish session. However, the crypto news wires need to be crypto-friendly to support a breakout session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $16,735 and resistance at $16,750. The Third Major Resistance Level (R3) sits at $16,892.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,493 in play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,300. The Second Major Support Level (S2) at $16,421 should limit the downside. The Third Major Support Level (S3) sits at $16,264.

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

BTC support levels in play below the pivot.
BTCUSD 010123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA, currently at $16,691. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through R1 ($16,650) and the 50-day EMA ($16,691) would support a run at R2 ($16,735) and the 100-day EMA ($16,790). A breakout from the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($16,691) would bring the Major Support Levels into view.

EMAs remain bearish.
BTCUSD 010123 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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