Key Findings:
- On Wednesday, Bitcoin (BTC) slipped 5.75% to below $29,000 as investors belatedly reacted to Tuesday’s Fed Chair Powell’s comments.
- The downside came despite the Bitcoin Fear & Greed Index rebounding from 8/100, its lowest since a March 14, 2020 low of 8/100.
- Bitcoin (BTC) technical indicators are flashing red, with Bitcoin trading below the 50-day EMA.
Bitcoin (BTC) slipped 5.75% on Wednesday, weighed down by Fed Chair Powell’s comment. Bitcoin reversed a 1.93% gain on Tuesday to end the day at $28,667.
In a mixed session, Bitcoin surged to an early high of $30,674 before going into reverse.
Bitcoin fell below Tuesday’s high of $30,744 and slipped to a late intraday low of $28,610 before stabilizing.
Bearish sentiment from US stock markets spilled over into the crypto market, with Bitcoin-NASDAQ correlation strengthening.
The sell-off was due to a delayed market reaction to Fed Chair Powell’s speech on Tuesday.
Several drivers are currently in play to test crypto investors’ appetites. These include the threat of a shift in the regulatory landscape, fears of a recession, Fed monetary policy, and the risk of another stablecoin collapse.
The Bitcoin Fear & Greed Index remains deep in the extreme fear zone
This morning the Fear & Greed Index rose to 13/100 from 12/100. While the index continued to recover from Tuesday’s 8/100, it remained deep in the “Extreme Fear” zone, reflecting bearish sentiment across the crypto market.
Fear & Greed 190522
The northerly move in the Fear & Greed Index had a muted impact on investor sentiment as US stock markets turned around mid-week. The NASDAQ 100 led the way, slipping 4.73% as investors reacted to Tuesday’s comments from Fed Chair Powell.
After giving reassurances to markets about major rate hikes the week before, the Fed chair spoke of a willingness to move policy beyond neutrality to curb inflation. Powell also discussed potential labor market pains, but acknowledged the Fed should have hiked sooner.
BTCNASDAQ 1905 Correlation Chart
Bitcoin (BTC) price action
At the time of writing, BTC is up 1.02% to $28,959.
BTCUSD 190522 daily chart
Technical indicators
BTC needs to move through the $29,315 pivot to target the first major resistance level at $30,026 and Wednesday’s high at $30,674.
BTC would need the broader crypto market to support a return to $30,000.
An extended rally would test the second major resistance level at $31,383 and resistance at $32,000. The third major resistance level is located at $33,445.
If the pivot is not breached, the first major support level would be tested at $27,959. Barring another extended sell-off, BTC should avoid the sub-$27,000 level. The second major support level at $27,252 should limit the downside.
BTCUSD 190522 hourly chart.
Looking at the EMAs and the 4-hour candlestick chart (below), this is a bearish signal. BTC is below the 50-day EMA, currently at $30,541. This morning the 50-day EMA retreated from the 100-day EMA. The 100-day EMA retreated from the 200-day EMA; BTC negative.
A move through the 50-day EMA would support a run to $32,500.
BTCUSD 190522 4 hour chart
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