BTC Fear & Greed Index Signals Red Despite BTC Return To $17,000

Bob Mason
Updated: Jan 9, 2023, 07:49 GMT+00:00

BTC returned to $17,000 on Sunday. However, the Fear & Greed Index remains in the Extreme Fear zone signaling a choppy Monday session.

BTC Technical Analysis - FX Empire

In this article:

Key Insights:

  • It was a bullish Sunday, with BTC rising by 1.07% to end the day at $17,140.
  • A final-hour breakout delivered the Sunday gains, with hopes of a US economic soft landing driving demand for riskier assets.
  • However, the Fear & Greed Index held steady at 25/100, signaling crypto market uncertainty.

On Sunday, bitcoin (BTC) rose by 1.07%. Reversing a 0.06% loss from Saturday, BTC ended the week up by 2.99% to $17,140. Notably, BTC ended the day at $17,000 for the first time since December 15.

A bearish start to the day saw BTC slip to an early low of $16,930. Steering clear of the First Major Support Level (S1) at $16,925, BTC surged to a final-hour high of $17,181. BTC broke through the Major Resistance Levels to end the day at $17,140.

Fed Monetary Policy Sentiment and the NASDAQ Mini Deliver Support

Hopes of a US economic soft landing supported a bullish end to the Sunday session. The NASDAQ mini kicked off the week in positive territory as investors responded further to the US Jobs Report and the ISM Non-Manufacturing PMI survey from Friday.

While the latest ISM PMI numbers signal a US economic recession, bets of a 50-basis point Fed interest rate hike in February have tumbled, easing fears of a Fed-fueled hard landing.

The bullish session came despite US agencies ramping up investigations into Binance US and the weekend news of Huobi Global laying off 20% of its workforce.

Today, there are no US economic indicators for investors to consider. However, it could be a choppy day ahead, with the SEC v Ripple case in the spotlight and the earnings season kicking off this week.

While the NASDAQ Index will influence, investors should monitor FOMC member chatter. Hawkish commentary would send BTC and the broader crypto market into reverse. The NASDAQ mini was up 31 points this morning.

NASDAQ correlation.
NASDAQ – BTCUSD 090123 Hourly Chart

The Fear & Greed Index Ignores BTC Return to $17,000

Today, the BTC Fear & Greed Index held steady at 25/100. Following Saturday’s fall into the Extreme Fear zone, there were no catalysts to support an Index return to the Fear zone.

While BTC wrapped up the day at $17,000, crypto market headwinds continue to pressure the Fear & Greed Index. Uncertainty over the outcome of the SEC v Ripple case, regulatory risk, and contagion fears remain crypto market headwinds. External market forces are also at play, with the US economic outlook and Fed monetary policy other considerations.

Huobi Global and Binance US are two platforms in the spotlight. Negative news could send the Fear & Greed Index deeper into the Extreme Fear zone.

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 flashes red.
Fear & Greed 090123

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.22% to $17,178. A choppy start to the day saw BTC fall to an early low of $17,123 before rising to a high of $17,219.

BTC finds early support.
BTCUSD 090123 Daily Chart

Technical Indicators

BTC needs to avoid the $17,084 pivot to target the First Major Resistance Level (R1) at $17,237. A move through the morning high of $17,219 would signal a bullish session. However, the crypto news wires should be market-friendly to support a breakout.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,335 and resistance at $17,500. The Third Major Resistance Level (R3) sits at $17,586.

A fall through the pivot would bring the First Major Support Level (S1) at $16,986 into play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,850 and the Second Major Support Level (S2) at $16,833. The Third Major Support Level (S3) sits at $16,582.

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

BTC resistance levels in play above the pivot.
BTCUSD 090123 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bullish signal. BTC sat above the 200-day EMA, currently at $16,925. After the bullish cross on Saturday, the 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above S1 ($16,986) and the 200-day EMA ($16,925) would support a breakout from R1 ($17,237) to target R2 ($17,335). However, a fall through S1 ($16,986) and the 200-day EMA ($16,925) would give the bears a run at the 50-day EMA ($16,867). A fall through the 50-day EMA ($16,820) would be a bearish signal.

EMAs are bullish.
BTCUSD 090123 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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