BTC Fear & Greed Index Falls Despite BTC Avoiding Sub-$16,000

Key Insights:

• On Wednesday, bitcoin (BTC) rose by 2.44% to end the day at $16,613.
• Investor fears toward FTX contagion eased further on Wednesday, supporting a breakout session.
• However, the Fear & Greed Index fell from 22/100 to 20/100, reflecting investor angst over the FTX collapse and likely shift in the regulatory landscape.

On Wednesday, bitcoin (BTC) rose by 2.44%. Following a 2.87% gain from Tuesday, BTC ended the day at $16,613. Notably, BTC avoided sub-$16,000 for the first time in three sessions.

A mixed start to the day saw BTC fall to an early morning low of $16,168. Steering clear of the First Major Support Level (S1) at $15,791, BTC rallied to a late high of $16,682. BTC broke through the First Major Resistance Level (R1) at $16,469 to end the day at $16,613.

FTX contagion risk eased further on Wednesday, providing much-needed crypto market support. Following the news of FTX holding $1.24 billion in cash reserves, former FTX CEO Sam Bankman-Fried raised hopes of investors saving the company.

In a letter to employees, Bankman-Fried said,

“Maybe there still is a chance to save the company. I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole. But I can’t promise you that anything will happen because it’s not my choice.”

The letter followed reports of Tron’s Justin Sun and Ripple’s Brad Garlinghouse showing interest in acquiring FTX assets. Coupled with the reported cash holding of $1.24 billion, investors are hoping that the collapse of FTX will have a limited impact on creditors.

Overnight, the FOMC meeting minutes delivered further crypto market support. Talk of taking the foot off the gas supported riskier assets ahead of the holidays, with the NASDAQ Composite Index rising by 0.99%. However, US economic indicators disappointed, limiting the upside for the NASDAQ.

There are no US stats to consider today, with the US markets closed for Thanksgiving.

The Fear & Greed Index Falls but Avoids Sub-20/100

Today, the BTC Fear & Greed Index fell from 22/100 to 20/100. The Index failed to respond to bullish BTC sessions for the second consecutive session. The fall to 20/100 also came despite BTC avoiding sub-$16,000 for the first time in three days.

While sentiment toward FTX contagion has improved, the Index reflects investor uncertainty toward the likely fallout from the FTX collapse.

On Tuesday, the Judge presiding over the FTX bankruptcy case agreed to redact the identities of FTX clients. The redactions leave investors facing uncertainty over whether another big name will fall.

While falling to 20/100, avoiding sub-20/100 remains the key for the BTC bulls. A fall to sub-20/100 would see BTC face the risk of sub-$10,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.34% to $16,556. A mixed start to the day saw BTC rise to an early high of $16,619 before falling to a low of $16,556.

Technical Indicators

BTC needs to avoid the $16,488 pivot to target the First Major Resistance Level (R1) at $16,807. A move through the Wednesday high of $16,682 would signal a bullish session. However, FTX updates have to be market-friendly to support a breakout session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,002. The Third Major Resistance Level (R3) sits at $17,516.

A fall through the pivot would bring the First Major Support Level (S1) at $16,293 into play. Barring another extended sell-off, BTC should avoid sub-$16,000 and the Second Major Support Level (S2) at $15,974. However, negative FTX-related news could send BTC to sub-$15,000.

The Third Major Support Level (S3) sits at $15,460.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat at the 50-day EMA, currently at $16,542. The 50-day EMA flattened on the 200-day EMA, while the 100-day EMA eased back from the 200-day EMA, delivering mixed signals.

A breakout from the 50-day EMA ($16,542) would support a run at R1 ($16,807) and $17,000. However, a fall through the 50-day EMA ($16,542) would bring S1 ($16,293) and sub-$16,000 into play.