BTC and a Return to $29,000 Hinged on Passing the Debt Ceiling Deal

Key Insights:

• On Tuesday, BTC slipped by 0.18% to end the day at $27,723.
• Investor jitters about the upcoming US debt ceiling vote left BTC in the red,
• However, the technical indicators are bullish, signaling a return to $30,000.

On Tuesday, bitcoin (BTC) fell by 0.18%. Following a 1.15% loss on Monday, BTC ended the day at $27,723. Significantly, BTC avoided sub-$27,000 for the second time since May 9.

A bullish morning saw BTC rise to a late-morning high of $28,069. Falling short of the First Major Resistance Level (R1) at $28,315, BTC fell to a late afternoon low of $27,600. Steering clear of the First Major Support Level (S1) at $27,390, BTC found late support to end the day at $27,723.

US Debt Ceiling Jitters and Economic Indicators Weighed

It was a relatively quiet Tuesday session. After the Monday holiday, investors remained focused on the US debt ceiling deal.

Reports from Monday of several Republican lawmakers planning to vote against the deal continued resonating throughout the session.

Better-than-expected US consumer confidence figures failed to deliver support. The CB Consumer Sentiment Index fell from 103.7 to 102.3 in May versus a forecasted 99.0.

BTC ended the session in the red despite the NASDAQ Composite Index gaining 0.32% on Tuesday. Market bets on a 25-basis point Fed Interest rate hike in June contributed to the bearish session. According to the CME FedWatch Tool, the probability of a June interest rate hike increased from 58.4% to 66.6% on Tuesday.

However, there were no crypto events to move the dial on Tuesday as investors await Court rulings from the ongoing SEC v Ripple case. A Ripple victory could hand regulatory oversight powers to the CFTC.

The Day Ahead

It is a busy Wednesday session. China private sector PMI numbers for May will set the tone this morning. A better-than-expected NBS Manufacturing PMI would support BTC and the broader crypto market. However, the PMI needs to breach 50.0 to deliver a breakout session.

US JOLTs job openings and FOMC member chatter will also draw attention later today. While the headline figure will influence, investors should consider quit rates. A pickup in quit rates would signal employee confidence in US labor market conditions.

FOMC members Bowman and Harker could also move the dial as investors grapple with the increasing bets on a June interest rate hike. While Fed chatter and the Jobless Claims will influence, US debt ceiling deal-related news will likely remain the key driver.

However, investors should continue to track the crypto news wires. SEC activity, SEC v Ripple updates, and Binance and Coinbase (COIN)-related news would draw interest.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.05% to $27,709. A mixed start to the day saw BTC rise to an early high of $27,726 before falling to a low of $27,709.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to move through the $27,797 pivot to target the First Major Resistance Level (R1) at $27,995 and the Tuesday high of $28,069. A return to $28,000 would signal an extended bullish session. The US debt ceiling-related news and economic indicators should 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 $28,266 and resistance at $28,500. The Third Major Resistance Level (R3) sits at $28,735.

Failure to move through the pivot would leave the First Major Support Level (S1) at $27,526 in play. However, barring an event-fueled sell-off, BTC should avoid sub-$27,000. The Second Major Support Level (S2) at $27,328 should limit the downside. The Third Major Support Level (S3) sits at $26,859.

Looking at the EMAs and the 4-hourly candlestick chart (below), the EMAs are bullish. BTC sat above the 200-day EMA ($27,464). The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA closing in on the 200-day EMA, sending bullish signals.

A hold above the 200-day EMA ($27,464) would support a breakout from R1 ($27,995) to target R2 ($28,266) and $28,500. However, a fall through S1 ($27,526) and the 200-day EMA ($27,464) would bring S2 ($27.328) and the 50-day EMA ($27,288) into view. A fall through the 50-day EMA would send a bearish signal.