BTC Fear & Greed Index Sits in the Extreme Fear Zone Despite BTC Gain

Key Insights:

• On Monday, bitcoin (BTC) fell to a new September low before a US session rebound to end the day up 0.65%.
• Fed and recession fears resurfaced ahead of Wednesday’s policy decision. However, the NASDAQ 100 rebound supported a BTC return to $19,500.
• The Bitcoin Fear & Greed Index rose from 21/100 to 23/100, supported by the BTC return to $19,500.

On Monday, bitcoin (BTC) rose by 0.65%. Partially reversing a 3.51% slide from Sunday, BTC ended the day at $19,545. It was the fourth time since July 3 that BTC failed to visit $20,000.

A bearish start to the day saw BTC slide to a mid-morning and new September low of $18,256. BTC fell through the First Major Support Level (S1) at $19,137 and the Second Major Support Level (S2) at $18,856.

However, finding support from the NASDAQ, BTC rallied to a late high of $19,694 before easing back to sub-$19,600. Despite the rebound, BTC came up short of the First Major Resistance Level (R1) at $19,912.

Early in the session, Fed and recession fears sent BTC to a new September low. However, a pickup in appetite for riskier assets supported the rebound. The markets remain torn on whether the Fed will take advantage of labor market conditions to crank up rates at a faster pace.

On Monday, the probability of a 75-basis point was 81.0% versus 19.0% for a percentage point hike. The latest split was less hawkish than on Sunday when the chance of a percentage point hike stood at 21%.

With the Fed’s Wednesday policy decision and projections being the main event, the crypto market will likely continue to track the NASDAQ 100. There are no US economic indicators to shift sentiment today.

On Monday, the NASDAQ 100 rose by 0.76%, with the NASDAQ 100 Mini up 36.5 points this morning.

Bitcoin Fear & Greed Index Reflects Heightened Market Uncertainty

Today, the Fear & Greed Index rose from 21/100 to 23/100. The Index responded to the bullish crypto market session and a BTC return to $19,500. However, investor uncertainty towards the Fed and the economic outlook left the Index in the Extreme Fear zone.

For investors considering the Index as a guide, the lack of a trend reflects the current uncertainty surrounding the Fed policy decision and economic outlook.

In recent weeks, avoiding sub-20/100 has been the key. The bears will be eying a fall to sub-20/100 to signal a BTC slide to sub-$18,000. By contrast, the bulls will look for an Index return to 40/100 to support a move toward $25,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.71% to $19,406. A mixed start to the day saw BTC rise to an early high of $19,635 before falling to a low of $19,376.

Technical Indicators

BTC needs to avoid the $19,165 pivot to target the First Major Resistance Level (R1) at $20,074. With investors looking ahead to Wednesday’s monetary policy decision, the NASDAQ 100 will remain an influence. There are no US economic indicators to consider today.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,603 and resistance at $21,000. The Third Major Resistance Level (R3) sits at $22,041.

A fall through the pivot would bring the First Major Support Level (S1) at $18,636 and the September low of $18,256 into play. Barring another extended sell-off, BTC should avoid the Second Major Support Level (S2) at $17,727 and the June/2022 low of $17,601.

The Third Major Support Level (S3) sits at $16,289.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $19,953.

The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

A move through the 50-day EMA ($19,953) and R1 ($20,074) would give the bulls a run at the 100-day EMA ($20,236) and R2 ($20,603). The 200-day EMA sits at $20,718. However, failure to move through the 50-day EMA would leave BTC under pressure.

Trend Analysis

Looking at the trends, BTC would need a move through the August high of $25,203 and $25,500 to target the June high of $31,956. Avoiding a fall through the September low of $18,256 would support a move back towards $25,000.

However, the trend has turned bearish following Monday’s new September low. A fall through the September low of $18,256 would bring sub-$18,000 and the June low of $17,601 into play. A Fear & Greed Index return to 30/100 should support a shift in sentiment, which may hinge on the Fed.