BTC Fear & Greed Index Slides Deep into the Extreme Fear Zone

Bob Mason
Published: Sep 16, 2022, 01:33 UTC

It was a bearish BTC session, with a fall to sub-$20,000 leading to an Index slide to 20/100. The Index will need to avoid sub-20/100 to deliver BTC support.

BTC technical analysis - FX Empire

Key Insights:

  • On Thursday, bitcoin (BTC) fell by 2.57%, marking the second loss in nine sessions.
  • Market reaction to the Ethereum Merge and a bearish NASDAQ 100 session weighed.
  • The Bitcoin Fear & Greed Index slid from 28/100 to 20/100, with the bearish BTC session sending the Index into the Extreme Fear zone.

On Thursday, bitcoin (BTC) fell by 2.57%. Reversing a 0.29% gain from Wednesday, BTC ended the day at $19,714. It was the first sub-$20,000 finish since September 8.

A mixed start to the day saw BTC rise to a mid-morning high of $19,508. Coming up short of the First Major Resistance Level at $20,639, BTC fell through the First Major Support Level (S1) at $19,727 to a low of $19,508 before briefly testing resistance at $20,000. However, a bearish end to the day saw BTC fall back through S1 to end the day at $19,714.

Market reaction to the Ethereum (ETH) Merge was bearish despite a reportedly seamless transition to a Proof-of-Stake (PoS) protocol. Adding to the market angst was a bearish NASDAQ 100 session. On Thursday, the NASDAQ 100 fell by 1.43%. Hopes of a less hawkish Fed faded, with US economic indicators supporting the anticipated 75-basis point rate hike.

NASDAQ correlation.
NASDAQ – BTCUSD 160922 5-Minute Chart

Bitcoin Fear & Greed Index Slides into the Extreme Fear Zone

Today, the Fear & Greed Index slid from 28/100 to 20/100. The slide came in response to a BTC return to sub-$20,000 as investors reacted to the Merge and the bearish NASDAQ 100 session.

While the Index fell back into the Extreme Fear zone, avoiding sub-20/100 was 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 BTC bulls will look for an Index return to 40/100 to support a BTC move toward $25,000.

Fear & Greed Index slides into the Extreme Fear zone.
Fear & Greed 160922

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.19% to $19,752. A choppy start to the day saw BTC fall to an early low of $19,602 before rising to a high of $19,767.

BTC finds early support.
BTCUSD 160922 Daily Chart

Technical Indicators

BTC needs to move through the $19,851 pivot to target the First Major Resistance Level (R1) at $20,193 and the Thursday high of $20,330. Crypto-friendly US economic indicators would support a return to $20,000.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,673. The Third Major Resistance Level (R3) sits at $21,495. Market risk sentiment will need to improve ahead of the US session to support a breakout.

Failure to move through the pivot would bring the First Major Support Level (S1) at $19,371 into play. Barring an extended sell-off, BTC should avoid sub-$19,000. The Second Major Support Level (S2) at $19,029 should limit the downside.

The Third Major Support Level (S3) sits at $18,207.

BTC support levels in play below the pivot.
BTCUSD 160922 Hourly Chart

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 $20,592.

Following Thursday’s bearish cross, the 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

BTC will need to move through the 50-day EMA ($20,592) and the 100-day EMA ($20,633) to target R2 ($20,673). However, failure to move through R1 ($20,193) and the 50-day EMA would leave the Major Support Levels in play.

EMAs bearish.
BTCUSD 160922 4 Hourly Chart

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 $18,549 would support a move back towards $25,000.

However, the current trend has turned bearish after Tuesday and Thursday’s losses. A BTC fall through the September low of $18,549 would bring sub-$18,000 and the June low of $17,601 into play.

Trends bearish.
BTCUSD 160922 Daily Chart Trends

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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