BTC Fear and Greed Index Drops on US Inflation Figures, Fed Fears

the main ideas:

  • On Friday, Bitcoin (BTC) ended a small two-day winning streak with a 0.81% loss to end the quarter at $19,430.
  • At a volatile end to the quarter, an increase in inflationary pressures took its toll in the US while a downward revision in consumer sentiment limited the damage.
  • However, the Bitcoin Fear & Greed Index fell from 21/100 to 20/100.

On Friday, Bitcoin (BTC) was down 0.81%. BTC reversed a 0.88% gain from Thursday, ending the month down 1.99% at $19,430. The third quarter was forgetful about BTC, with a 37.25% drop in July, which saw BTC drop by 38,9% for the quarter. In the previous quarter, bitcoin fell 53.84%.

A choppy start to the Friday session saw BTC drop to an early low of $19,154. Avoiding the first major support level (S1) at $19,081, BTC surged to a mid-afternoon high at $20181. BTC broke the first major resistance level (R1) at $19,874 and the second major resistance level (R2) at $20,160.

But late in the session, BTC slipped from the Nasdaq 100 index into the red.

Fed and recession fears leave Nasdaq and Bitcoin in the red

On Friday, the Nasdaq 100 fell 1.51% to end the quarter down 4.11%. Fed concerns resurfaced at the end of the week, with US inflationary pressures mounting in August. The core PCE price index rose 4.9 percent, up from 4.7 percent in July.

Diluted consumer sentiment numbers for September provided a brief relief before BTC and NASDAQ reversed gains. In September, the Michigan Consumer Confidence Index rose from 58.2 to 58.6, down from the initial 59.5.

Nasdaq – BTCUSD 011022 5-minute chart

The Fed’s fears and market fears about a recession led to the Nasdaq 100 index losing for the third time in a row, the longest losing streak since the global financial crisis. The correlation between BTC and the NASDAQ was evident during the three quarters of the year. However, bitcoin fell for the fourth consecutive quarter.

Nasdaq – BTCUSD 011022 Daily Chart

Bitcoin Fear and Greed Index Avoids Below 20 Despite Bearish Session

Today’s Fear and Greed Index has dropped from 21/100 to 20/100. A bearish session fueled by inflation and Fed concerns led to a pullback. The index is deep in the area of ‚Äč‚Äčintense fear, reflecting investor sentiment toward the Federal Reserve and the economic outlook.

In recent weeks, avoiding sub-20/100 has been key. Bears will look for a dip below 20/100 to signal a BTC drop below $18,000, in turn, bulls will look for an indicator back to 40/100 to support a move towards $25,000.

Fear and Greed 011022

Bitcoin (BTC) Price Action

At the time of writing, BTC is down 0.28% at $19,375 and the range-limited start of the day saw BTC surge to an early high of $1,485 before dropping to $19,374.

BTCUSD 011022 Daily Chart

Technical Indicators

BTC needs to break above the $19,588 pivot to target the first major resistance (R1) at $20,023 and Friday’s high at $20,181. BTC’s move during Friday may indicate a bullish session.

In the event of another extended rally, BTC should test the second major resistance (R2) at $20,615 and the resistance at $21,000. And the third major resistance level (R3) is at $21,642.

Failure to breach the pivot leaves the first major support level (S1) at $18996 in play. Barring an extended sell-off, BTC should avoid below $18,500, and the second major support level (S2) at $18.561 is likely to limit the downside.

The third major support level (S3) is $17,534.

BTCUSD 011022 hourly chart

Looking at the exponential moving average and the 4-hour candlestick chart (below), it was a bearish signal. This morning, Bitcoin is sitting on the 50-day moving average, currently at $19,372.

The 50-day moving average fell to the 100-day moving average, while the 100-day moving average settled at the 200-day moving average, giving mixed price signals.

A break of the 100-day moving average ($19,530) would give the bulls a run at the 200-day moving average ($20,005) and R1 ($20,023). However, a slide across the 50-day EMA ($19,372) would give the bears a run at S1 ($18,996).

BTCUSD 011022 4-hour chart

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