BTC Fear & Greed Index Signals Climbs to Signal a Bullish BTC Session

Key Insights:

• It was a bearish Tuesday, with BTC falling by 0.29% to end the day at $21,136.
• US economic indicators and corporate earnings left BTC in the red for the second time in ten sessions.
• However, the Fear & Greed Index rose from 51/100 to 52/100, supported by a BTC hold onto the $21,000 handle.

On Tuesday, bitcoin (BTC) slipped by 0.29%. Partially reversing a 1.51% gain from Monday, BTC ended the day at $21,136. Notably, BTC held onto the $21,000 handle for the second time since November 5.

A bearish start to the day saw BTC fall to an early low of $20,853. Steering clear of the First Major Support Level (S1) at $20,734, BTC rose to an early afternoon high of $21,586. BTC broke through the First Major Resistance Level (R1) at $21,564 before a late pullback into the red.

US Economic Indicators and Mixed Earnings Weighed on Riskier Assets

After the Monday holiday, US economic indicators and corporate earnings drew interest. An unexpected fall in the NY Empire State Manufacturing Index reignited US economic recession fears. The Index slid from -11.2 to -32.9 versus a forecasted -8.7.

The latest manufacturing numbers followed the December ISM Manufacturing and Non-Manufacturing PMI numbers that signaled a contraction across the US private sector. While the unexpected fall was bearish, the contraction supported bets of a 25-basis point interest rate hike in February, which limited the impact on BTC and the broader crypto market.

Corporate earnings were mixed. Goldman Sachs (GS) was the biggest drag on the Dow after reporting a larger-than-expected fall in quarterly profits. In contrast, Morgan Stanley (MS) beat estimates.

While recession fears and mixed earnings tested buyer appetite, the easing FTX contagion risk and increased activity in the digital asset space cushioned the downside. Hard forks, network development, and increased adoption have fueled an early 2023 rally.

However, the risk of a material shift in the regulatory landscape remains a crypto market headwind, which will continue to test the recent improvement in investor sentiment.

Today, US economic indicators will provide direction through the afternoon session. US wholesale and retail sales figures will draw interest. However, investors should also monitor FOMC member chatter.

This morning, the NASDAQ Mini was down 20.75 points.

The Fear & Greed Index Inches Higher Despite BTC Loss

Today, the BTC Fear & Greed Index rose from 51/100 to 52/100. Significantly, the Index avoided a return to the fear zone despite a second BTC loss in three sessions.

Easing FTX contagion risk and a BTC hold onto the $21,000 handle supported the modest increase. However, the Index will need to return to the Greed zone (55/100) to support a BTC return to $25,000. The Index last visited the Greed zone in March 2022.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.54% to $21,250. A mixed start to the day saw BTC fall to an early low of $21,115 before rising to a high of $21,263.

Technical Indicators

BTC needs to avoid a fall through the $21,192 pivot to target the First Major Resistance Level (R1) at $21,530 and the Tuesday high of $21,586. A return to $21,500 would support another bullish session. However, the crypto news wires and US economic indicators should be market-friendly to deliver a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $21,925 and resistance at $22,000. The Third Major Resistance Level (R3) sits at $22,658.

A fall through the pivot would bring the First Major Support Level (S1) at $20,797 into play. Barring a crypto event-fueled sell-off, BTC should avoid sub-$20,500 and the Second Major Support Level (S2) at $20,459. The Third Major Support Level (S3) sits at $19,726.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $19,850. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA ($19,850) would support a breakout from R1 ($21,530) to target R2 ($21,925) and $22,000. However, a fall through S1 ($20,797) and S2 ($20,459) would give the bears a run at the 50-day EMA ($19,850). A fall through the 50-day EMA would signal a shift in sentiment.