BTC Fear & Greed Index Remain Greedy Despite Stronger Headwinds

Bitcoin's (BTC) price dropped by 1.49% on Tuesday. BTC finished the day at $24,466, partially reversing a Monday's 2.27% gain. Despite the bearish session, BTC avoided trading below $24,000 and returned to the $25,000 handle for the sixth time in six sessions.

Following a strong start to the day, Bitcoin increased to a high of $25,227 at mid-morning. BTC, however, declined to a late low of $24,172 after failing to surpass the First Major Resistance Level (R1) at $25,345. Before completing the day at $24,466 for BTC, it briefly breached the First Significant Support Level (S1) at $24,093.

Fed apprehension overshadows optimism regarding the US economy

The US markets plunged BTC and the larger crypto market into negative territory after the vacation on Monday.

Investors bet on the Fed raising rates for a longer period of time to bring inflation to target as a result of better than anticipated private sector PMI readings, which boosted Fed Fear. The US services PMI increased in February from 46.8 to 50.5, exceeding expectations for a rise to 47.2.

The most recent data provide the Fed justification to pursue a more aggressive Fed rate path in order to bring inflation to target, given that the services sector makes up more than two-thirds of the US economy.

The NASDAQ Composite Index saw its worst session of 2023 as a result of the statistics and investor opinion regarding Fed monetary policy. The S&P 500 and Dow, which suffered losses of 2.06% and 2.00%, respectively, weren't much better off.

Although there was interest in the cryptocurrency announcement, nothing changed.

The news that Polygon Network was laying off employees was negative for the market, while plans to offer crypto trading to retail consumers in Hong Kong and the restart of withdrawals at FTX Japan were favorable. The implications of the protracted crypto winter, however, were emphasized by Coinbase's (COIN) quarterly earnings, which also reminded the markets of the difficult path ahead and the rising regulatory scrutiny.

The Coming Day

With the FOMC meeting minutes and FOMC member talk influencing the NASDAQ Index and the cryptocurrency market, it is yet another busier day. Following the Fed-driven sell-off on Tuesday, a more hawkish-than-expected Fed would test the market's willingness to buy. Williams, a FOMC member, might change the course of events later in the day.

The NASDAQ mini was down 20.25 points this morning, indicating a gloomy start to the American session.

Yet, it will be important to keep an eye on American legislative and regulatory activity. Investors should also keep an eye on the cryptocurrency news wires for developments from Silvergate Bank, FTX, and Binance that might shift the market.

Fear & Greed Index: Greedy Still Despite BTC becoming bearish

The BTC Fear & Greed Index decreased today, falling from 60/100 to 59/100. Despite the bearish Bitcoin session, the Index stayed within the Greed zone, indicating regulatory resilience in the face of heightened regulatory scrutiny and Fed Fear.

The market expectations for a more aggressive Fed interest rate trajectory could be confirmed by today's FOMC meeting minutes, which would put investor confidence to the test. The impact should be limited, though, as US economic indicators continue to depict a more positive US macroeconomic outlook.

To support a Bitcoin breakout from $25,000 to target $30,000, the Index must stay out of the Neutral zone after returning to the Greed zone. However, a return of the Index to the Fear zone would indicate a short-term reversal of the bullish trend.