Support from the NASDAQ 100 gave Bitcoin (BTC) and the wider crypto market a much-needed lift late Thursday after a tumultuous first half of the week. Bitcoin recovered from Thursday's $36,200 lows to close Friday above $41,000 levels, as part of yet another tech market bounce.
The price of Bitcoin increased by 11.41 percent on Friday, reaching $41,590 at the time of writing.
SOL climbed 10.56 percent, while ETH returned to $3,000 levels after gaining 11.14 percent on Friday, in other news.
Following a drop to $1,489 billion on January 24th, the overall crypto market value has now risen to $1,850 billion as a result of the broad-based rebound.
The Fear and Greed Index for Bitcoin
Due to Friday's Bitcoin rise, the Bitcoin Fear & Greed Index increased from 20/100 to 33/100, indicating increased investor confidence. It was the first time since December 28th, when the Index was at 41/100, that the Index had moved out of the red zone. In January, the Bitcoin Index was 8/100, down from November's all-time high of $68,979 to below $33,000. Buying Bitcoin is encouraged when the price re-enters the orange zone.
The NASDAQ rebounded on the strength of corporate earnings.
The NASDAQ 100 fell 3.74 percent on Thursday before recovering on Friday. Following the NASDAQ 100 on Thursday and Friday, Bitcoin was likewise in the red until the NASDAQ 100 rallied after hours. Amazon.com's after-hours rally fueled a Bitcoin rebound on Thursday and a breakout session on Friday, which was backed by the rebound.
To a large extent throughout this week, IMF cautions over cryptocurrencies and the US equities markets remained warranted. There was no clear evidence, however, of the crypto markets giving the U.S equities markets with direction.
Bitcoin Price Action
With the U.S markets closed for the weekend, technicals will likely be essential for the day ahead.
At the time of writing, Bitcoin was down by 0.29 percent to $41,470. Avoiding a collapse through the day’s $40,130 pivot would put the first significant resistance level at $43,199 into play. Bitcoin would need lots of support, though, to crack resistance at $42,000. In the case of another sustained breakthrough, the second major resistance level at $44,800 and resistance at $45,000 would certainly be challenged.
A collapse through the $40,130 pivot would put the first big resistance level at $38,520 into play. Barring a lengthy sell-off, Bitcoin should keep short of sub-$40,000 levels, though.
Looking at the EMAs and daily candlesticks, the signal remains negative. The 50-day EMA has pulled back from the 100-day and 200-day EMAs, with the 100-day EMA likewise pulling back from the 200-day EMA. Bitcoin stays below the 50-day EMA at $42,650 in spite of Friday’s breakout session.
Bitcoin will need to break through the 50-day EMA and go back through to $46,000 levels to support a near-term bearish trend reversal. At the time of writing, the 100-day EMA was at the $46,100 mark.
How do you utilize the Fear and Greed Index?
Investors may control the risk of their portfolios based on the fear greed index by raising their cash allocation when markets are heading down and increasing their equity allocation when markets are trending up.
This program utilizes stock market sentiment to find the best cash allocation in your portfolio. This is done by analyzing stocks in the market and figuring out the proportion of stocks that are in a decline. The bigger the proportion of equities in a downturn, the higher our cash allocation.
During a crisis when market sentiment is unfavorable and most equities start to undergo a slump, this strategy will raise its cash allocation to safeguard the investor's portfolio against big drawdowns. When the market begins to rebound and market sentiment becomes optimistic, the strategy will gradually transition from cash to shares to take advantage of rising prices throughout the recovery.
How does the S&P 500 fare with the Fear and Greed Index?
We evaluate the performance of investing in the S&P 500 using the cash allocation from our fear and greed index versus a buy and hold strategy on the S&P 500. The backtest reveals that our risky managed portfolio that depends on the fear＆greed index has a lower volatility and a smaller drawdown during a crisis.
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