BTC Bears Target Sub-$27,000 As Focus Turns To Federal Reserve

Sub Levels –

Key Insights:

  • On Monday, BTC fell 3.94% to end the day at $28,101.
  • First Republic Bank and US economic data put pressure on BTC and the broader cryptocurrency market.
  • Technical indicators turned bearish and showed a return to below $27,000.

Bitcoin (BTC) fell 3.94% on Monday. After finishing Sunday’s session flat, he ended the day with BTC at $28,101. In a bearish session, BTC fell below his $28,000 level for the first time since April 24th.

A mixed start to the day pushed BTC to an early high of $29,347. Below the first major support level (S1) of $29,781, BTC has fallen to his overnight low of $27,692. BTC has broken below the major support level and partially recovered at the third major support level (S3) at $27,725, ending the day at $28,101.

First Republic Bank salvage and US economic data weigh heavily

The start of the month was relatively quiet, with the Labor Day long weekend dampening trading volumes.

Volumes were light, but the latest information from First Republic Bank (FRC) made an impact on the session. On Monday, news broke that the FDIC had seized his First Republic Bank, and JPMorgan Chase (JPM) won a bid to buy the beleaguered bank’s assets.

Investors see the crypto market as a safe haven from the US banking crisis and the news was bearish on BTC. US economic data added to the bearish mood.

The ISM manufacturing PMI for April rose to 47.1 from 46.3. Key takeaways from the ISM survey included sharp increases in the employment and price subcomponents. The ISM manufacturing employment index jumped to 50.2 from 46.9 and the price index rose to 53.2 from 49.2.

Importantly, while the manufacturing sector continues to contract, price pressures intensified and manufacturers reported headcount increases for the first time in three months. The latest stats concern the Fed as it tries to deal with extremely tight labor market conditions to keep inflation in check and ease spending.

A combination of persistent inflation, rising employment trends and a hawkish Fed increases the odds of a hard landing.

The odds of a 25 basis point rate hike in May rose from 83.9% to 93.2% in 24 hours, according to the CME FedWatch tool. Importantly, the likelihood of a 25 basis point rate hike rose from 23.9% to 27.7% in June.

Fear of the Fed and jitters of recession contributed to the pullback, but profit taking was another possible factor. BTC extended his streak to four months in April. This is the longest monthly winning streak since his six-month streak, which ended in March 2021.

future day

It’s a relatively busy Tuesday session. US economic data will influence the afternoon session, while the US banking sector remains the focus. Attention will be paid to US JOLT job openings and factory orders.

With the Federal Reserve Board going into effect tomorrow, JOLT jobs are expected to attract more interest. However, the problem is in the details, and smoking cessation rates must be considered. Lower turnover would indicate worsening labor market conditions, easing pressure on the Fed to raise hawkish rates.

Away from the economic calendar, US corporate earnings also influence market risk sentiment. Big names on the US earnings calendar include Pfizer (PFE), Starbucks (SBUX) and Ford Motor Company (F).

US corporate earnings and economic data will play a role, but investors should keep track of the latest in the SEC v Ripple case and news related to Binance and Coinbase (COIN).

But regulatory activity and chatter among US lawmakers also move the dials.

Bitcoin (BTC) price action

BTC fell 0.28% to $28,023 this morning. A bearish start to the day saw BTC drop from the opening price of $28,101 to a low of $28,019.

BTCUSD 020523 daily chart

technical indicators

Resistance and support levels

R1 – $ 29,068 S1 – $ 27,413
R2 – $ 30,035 S2 – $ 26,725
R3 – $ 31,690 S3 – $ 25,070

BTC needs to cross the $28,380 pivot with the first major resistance level (R1) of $29,068 and Monday’s high of $29,347 as targets. A return to $29,000 suggests an extension of the bullish session. Crypto news wires and US economic data should be crypto-friendly to support the long-term rally.

If the rally drags on, BTC could test the second major resistance level (R2) at $30,035. The third major resistance level (R3) he is at $31,690.

Not passing the pivot leaves the first major support level (S1) at $27,413. However, in the absence of a sell-off due to crypto events, BTC should avoid his sub-$26,500 level. The second major support level (S2) of $26,725 should cap the downside. Third Major Support Level (S3) is $25,070.

BTCUSD 020523 hourly chart

Looking at the EMA and the 4-hour candlestick chart (below) was a bearish signal. BTC has broken below his 200-day EMA ($28,330). The 50-day EMA converged on the 100-day EMA and the 100-day EMA narrowed to the 200-day EMA, sending a bearish signal.

A bearish cross between the 50-day EMA and the 100-day EMA will support the fall of S1 ($27,413), bringing sub-$27,000 and S2 ($26,725). However, BTC’s move through the EMA supports a breakout from R1 ($29,068) and gives the bulls a run at R2 ($30,035). signal.

BTCUSD 020523 4-hour chart

This article was originally posted on FX Empire

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The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

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