the main ideas:
- On Sunday, Bitcoin (BTC) fell 3.51% to end the week below $20,000.
- The Fed’s fears have resurfaced, with no distraction from the market causing investors to look forward to Wednesday’s rate hike and the Federal Open Market Committee’s forecast.
- Bitcoin Fear & Greed Index fell from 27/100 to 21/100, with BTC yielding below $20,000.
On Sunday, Bitcoin (BTC) fell 3.51%. After reversing its 1.57% gain from Saturday, BTC ended the week down 11.1% at $19,418.
Bearish throughout the Sunday session, BTC fell from an early high at $20,255 to a late low at $19,350. BTC fell through the first major support level (S1) at $19,851 and the second major support level (S2) at $19,576 to end the day below $19,500.
Several factors may have contributed to Sunday’s turnaround. But investor sentiment against the Fed’s monetary policy decisions and FOMC expectations has likely taken a toll. The fear of a recession added to the market’s anxiety. The Fed’s tough revisions and downgrades to growth expectations could be a bad combination for riskier assets.
On Sunday, the 75-point probability was 79.0% versus 21.0% for a one-percentage point increase. The latest crash has been tighter than it was last Saturday when the chance of a 1 percentage point rate hike was at 18%.
With the Fed’s policy decision as the main event, the cryptocurrency market is likely to continue following the NASDAQ 100 index.
Bitcoin Fear & Greed Indicator Returns to Extreme Fear Zone
Today’s Fear and Greed Index has dropped from 27/100 to 21/100. The index responded to the cryptocurrency bear market session and the return of bitcoin to below $20,000. Notably, the index slipped back into the area of extreme fear, reflecting investors’ concerns about the Federal Reserve and the economic outlook.
Avoiding below 20/100 was key, although the bears would see a dip below 20/100 to signal a BTC drop below $18,000. In turn, bulls will be looking for an index back to 40/100 to support the move towards $25,000.
Bitcoin (BTC) Price Action
At the time of writing, BTC is up 0.25% at $19,467, and a mixed start to the day saw BTC drop to an early low of $19,401 before climbing to $19,522.
BTC needs to break above the $19,631 pivot to target the first major resistance (R1) at $19,912 and Sunday’s high at $20,125. With investors eyeing Wednesday’s monetary policy decision, the Nasdaq 100 is likely to be affected. There are no US economic indicators to consider today.
In the event of an extended rally, BTC should test the second major resistance (R2) at $20,406, the $20,500 resistance, and the third major resistance (R3) at $21,181.
Failure to break the pivot leaves the first major support level (S1) $19,137 in play. Barring an extended sell-off, BTC should avoid the September low at $18,549, and the second major support level (S2) at $18,856 should cover the downside.
The third major support level (S3) is $18,081.
Looking at the exponential moving average and the 4-hour candlestick chart (below), it was a bearish signal. This morning, Bitcoin is below its 50-day moving average, currently at $1,195. The 50-day moving average pulled back from the 100-day moving average, with the 100-day moving average pulling back from the 200-day moving average, giving bearish price signals.
A move through the R1 ($20,306) and 50-day EMA ($1905) will trigger the bulls at the 100-day EMA ($20,388) and R2 (20406). The 200-day EMA is at $20,822, however, a failure to break above the 50-day EMA will put Bitcoin under pressure.
Looking at the trends, BTC will need to move through the August highs at $2,5203 and $25,500 to target the June highs at $31956. Avoiding a fall through the September low at $18,549 would support a return towards $25,000.
However, the trend has turned bearish after Tuesday, Thursday and Sunday losses. A drop through the September low of $18,549 would put $18,000 below the low and the June low of $17,601 into play. The return of the Fear and Greed Index to 30/100 should support the change in sentiment, which may be due to the Federal Reserve.