ETH at Risk of Sub-$1,600 on SEC Action and Shanghai Hard Fork Silence

Key Insights:

• It was a bearish Wednesday session for bitcoin (BTC) and ethereum (ETH), with BTC returning to sub-$23,000.
• Hawkish FOMC member commentary and SEC regulation by enforcement weighed on investor sentiment.
• This morning, ETH and BTC were back into negative territory.

Ethereum (ETH) fell by 1.20% on Wednesday. Partially reversing a 3.47% rally from Tuesday, ETH ended the day at $1,651.

A bullish start to the day saw ETH rally to an early low of $1,700. ETH broke through the First Major Resistance Level (R1) at $1,696 before sliding to a late afternoon low of $1,630. However, finding support at the First Major Support Level (S1) at $1,630, ETH partially recovered to end the session at $1,651.

On Wednesday, bitcoin (BTC) fell by 1.24%. Partially reversing a 2.16% gain from Tuesday, BTC ended the day at $22,957. BTC wrapped up the day at sub-$23,000 for the third time in four sessions.

A bullish start to the day saw BTC rally to an early high of $23,430. Coming up short of the First Major Resistance Level (R1) at $23,483, BTC slid to a late afternoon low of $22,691. BTC fell through the First Major Support Level (S1) at $22,875 before wrapping up the day at $22,957.

Fed Fear and SEC Regulation by Enforcement Tests Investor Resilience

On Wednesday, FOMC member chatter and an Alphabet Inc. (GOOGL) tumble weighed on riskier assets. FOMC members Williams and Waller delivered hawkish speeches in response to the latest US Jobs Report, which went against Fed Chair Powell’s hope of keeping interest rates below 5%.

FOMC member John Williams talked of a strong labor market and the need to do more to bring inflation to target. Williams reportedly said that a peak rate of 5%-5.25% is still reasonable.

FOMC member Christopher Waller reportedly spoke of needing to keep monetary policy tighter for longer than anticipated.

In response, the NASDAQ ended the day with a 1.6% loss.

However, the crypto news wires added to the bearish mood, with SEC regulation by enforcement sending the crypto market into the red this morning. Reports of the SEC investigating Kraken for the sale of unregistered securities and rumors of the SEC planning to ban crypto staking added to the bearish mood.

Today, SEC chatter will remain a focal point, along with updates on FTX, Genesis, and Silvergate Bank. On the US economic calendar, US jobless claims will also provide direction. A fall in jobless claims would support more hawkish chatter and a more aggressive interest rate path to bring inflation to target.

Zhejiang testing and Shanghai hard fork news could support a bullish afternoon session for ETH. This morning, SSV Network responded to the rumors of the SEC planning to ban crypto staking for US retail customers, saying,

“Recent rumors regarding the SEC potential interference with CEX staking offerings has shown the importance of decentralized alternatives.”

Smooth progress toward the Ethereum Shanghai hard fork remains ETH positive.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 1.24% to $1,630. A mixed morning saw ETH rise to an early high of $1,656 before falling to a low of $1,609. ETH briefly fell through the First Major Support Level (S1) at $1,621.

Technical Indicators

ETH needs to move through the $1,660 pivot to target the First Major Resistance Level (R1) at $1,691 and the Wednesday high of $1,700. A return to $1,690 would signal a breakout session. However, Shanghai hard fork updates should be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,730 and resistance at $1,750. The Third Major Resistance Level (R3) sits at $1,800.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,621 in play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,600 and the Second Major Support Level (S2) at $1,590. The Third Major Support Level (S3) sits at $1,520.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 100-day EMA, currently at $1,614. The 50-day EMA moved away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A move through the 50-day EMA ($1,640) would support a breakout from R1 ($1,691) to target R2 ($1,730) and $1,750. However, a failure to move through the 50-day EMA ($1,640) would give the bears a run at S1 ($1,621) and the 100-day EMA ($1,614). A move through the 50-day EMA would send a bullish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 1.26% to $22,668. A mixed morning saw BTC rise to an early high of $23,003 before falling to a low of $22,380. BTC briefly fell through the First Major Support Level (S1) at $22,622.

Technical Indicators

BTC needs to move through the $23,026 pivot to target the First Major Resistance Level (R1) at $23,361 and the Wednesday high of $23,430. A move through the morning high of $23,003 would signal a breakout session. However, the crypto news wires and US stats will need to be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,765 and resistance at $24,000. The Third Major Resistance Level sits at $24,504.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,622 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,287 should limit the downside. The Third Major Support Level (S3) sits at $21,548.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a mixed signal. BTC sat below the 100-day EMA ($22,765). The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering a bullish signal.

A move through the 100-day ($22,765) and the 50-day ($23,070) EMAs would support a breakout from R1 ($23,361) to target R2 ($23,765) and $24,000. However, failure to move through the 100-day EMA ($22,765) would support a fall through S1 ($22,622) to target sub-$22,500 and S2 ($22,287). A move through the 50-day EMA would send a bullish signal.