- Bitcoin price has formed a bearish pennant pattern on the 4H chart.
- Bitcoin's fear and greed index has moved to the extreme fear zone.
Bitcoin price has formed a bearish pennant pattern as concerns about contagion remains. BTC to USD was trading at $16,515, where it has been in the past few days. Similarly, the BTC to GBP and BTC to EUR have plunged to 14,000 and 16,000, respectively.
BTC fear and greed index slips
Bitcoin price has been in a consolidation mode this week as investors focus on the collapse of FTX. The main fear is that this collapse will lead to a major contagion in the industry. While crypto prices have plummeted, contagion has been a bit limited.
The most affected in this contagion are venture capital firms like Sequoia, Temasek, and Softbank which have been forced to write off millions of dollars in investments. Gemini, a leading American crypto exchange also suspended withdrawals briefly.
As a result, fears of contagion have led to significant fear in the crypto market. The closely watched crypto fear and greed index has dropped to 20, the lowest level in months. It has diverged from the broad CNN Money fear and greed index, which has moved to the greed zone of 62.
Find out how to buy large amounts of Bitcoin.
In the past, the two fear and greed indices tend to move in sync. Data by CNN shows that key metrics like stock price strength and breadth, put and call options, and safe haven demand have moved to the greed area.
Meanwhile, data in the options market shows that Bitcoin’s put-to-call ratio slipped to about 0.55 from the year-to-date high of 0.7. A low put/call ratio is often seen as a bullish factor for an asset.
Bitcoin price has retreated as volatility resumed. After falling for weeks, the CBOE volatility index has bounced back to about $25, which is higher than this month’s low of $22.42.
Bitcoin price forecast
The four-hour chart shows that the BTC price has been in a consolidation phase in the past few days. It has formed a bearish pennant pattern that is shown in black. In price action analysis, this pattern is usually a bearish sign.
Bitcoin price has moved below the 50-day moving average while the Awesome Oscillator has moved below the neutral level. Therefore, I suspect that Bitcoin will have a bearish breakout as sellers target the key support level at $15,000. A move above the key resistance level at $17,000 will invalidate the bearish view.
