BTC Fear & Greed Index Reflects Extreme Fear Ahead of US NFP Numbers

Key insights:

  • Thursday was a bullish start to September for BTC, with a gain of 0.43% leaving BTC up 2.93% for the current week.
  • Better-than-expected US economic indicators, in a hawkish Fed environment, sent BTC into the red before a late recovery.
  • The Bitcoin Fear & Greed index rose from 20/100 to 25/100 but remained within the Extreme Fear zone.

Bitcoin (BTC) was up 0.43% on Thursday. After a 1.18% gain from Wednesday, BTC ended the day at $ 20,144. BTC visited less than $ 20,000 for the sixth consecutive session, but moved away from the July low of $ 18,962.

A bullish start to Thursday’s session saw BTC rise to a morning high of $ 20,212. Meeting the first major resistance level (R1) at $ 20,431, BTC slipped to the final low of $ 19,581. BTC broke above the First Major Support Level (S1) at $ 19,748 before a late bounce to $ 20,144.

US economic indicators sent BTC red. The ISM Manufacturing PMI remained stable at 52.8 in August. Economists are expecting a decline to 52.0. Significantly, the employment sub-component jumped from 49.9 to 54.2.

Initial jobless claims fell from 237,000 to 232,000 at the start of the session, with the 4-week average down from 245.5.5,000 to 241.5.5. Thursday’s dataset suggests that rate hikes and Fed forward guidance have had a weak impact on hiring, in support of more front loading.

Today, the focus will shift to U.S. non-farm payrolls and wage growth data for August. As the official labor market numbers are, another spike in hiring could force the Fed to take a more aggressive path to normalization.

Economic data from the US left the NASDAQ 100 down 0.26% on Thursday. This morning, the NASDAQ 100 Mini was up 6.25 points.

The Bitcoin Fear & Greed Index remains in the zone of extreme fear

Today, the Fear & Greed index rose from 20/100 to 25/100. Economic indicators raised questions about the Fed’s ability to slow the pace of hiring in the US.

The threat of a more aggressive policy to slow hiring and bring inflation to target has left the index within the Extreme Fear Zone.

With the index remaining within the Extreme Fear zone, BTC’s current year low of $ 17,605 remains in play. Nonfarm payroll data and US wage growth data will be two sets of numbers that investors will need to navigate today.

For the bulls, the index needs a move to 40/100 to support a return of BTC to $ 25,000. However, the deeper drop in the Extreme Fear zone suggests a further decline in BTC before any recovery.

Bitcoin (BTC) price action.

At the time of writing, BTC was down 0.19% to $ 20,105. A bearish start to the day saw BTC drop from an early day high of $ 21,142 to a low of $ 20,103.

BTCUSD 020922 daily chart

Technical indicators

BTC must avoid the $ 19,979 pivot to reach the First Major Resistance Level (R1) at $ 20,377. BTC would need a resumption of market risk sentiment to support a breakout from Thursday’s high of $ 20,212.

An extended rally in cryptocurrencies would see BTC testing the Second Major Resistance Level (R2) at $ 20,610 and resistance at $ 21,000. The third major resistance level (R3) is found at $ 21,241. Today’s moves will hinge on US data, with the cryptocurrency market likely to take its cue from the NASDAQ 100.

A fall through the pivot would bring the First Major Support Level (S1) into play at $ 19,746. Barring a prolonged sell-off, BTC should stay away from under $ 19,000. The second major support level (S2) at $ 19,348 should limit the downside.

The third major support level (S3) is found at $ 18,717.

BTCUSD 020922 Hourly chart

Looking at the EMAs and the 4-hour candlestick chart (below), it was a bearish sign. Bitcoin was trading below the 50-day EMA this morning, currently at $ 20,443.

The 100-day EMA has retreated from the 200-day EMA, with the 50-day EMA moving down from the 200-day EMA, providing bearish price signals.

A further pullback of the 50-day EMA from the 200-day EMA would bring the main support levels into play.

For the bulls, a move by BTC through R1 ($ 20,377) and the 50-day EMA ($ 20,443) would bring R2 ($ 20,610) and the 100-day EMA ($ 21,099) into view. The 200-day EMA is trading at $ 21,774.

BTCUSD 020922 4-hour chart

Trend analysis

Looking at the trends, BTC would need a move through the August high of $ 25,203 and $ 25,500 to reach the June high of $ 31,956. Avoiding the August low of $ 19,540 would support a return to the 50-day EMA to ease the selling pressure.

For bears, a dip during the August low would bring the July low of $ 18,768 and the June 18 low of $ 17.601 into play.

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