BTC and ETH Reaction to US Stats and the NASDAQ a Crypto Litmus Test

Key Insights:

• Bitcoin (BTC) and ethereum (ETH) joined the broader crypto market in positive territory on Monday.
• Contagion fear eased on news of Binance launching a recovery fund to support projects impacted by the FTX collapse.
• Investor sentiment remained upbeat this morning, with early hopes of an end to the crypto crisis delivering support.

Ethereum (ETH) rose by 1.89% on Monday. Partially reversing a 2.87% loss from Sunday, ETH ended the day at $1,242. Notably, ETH fell short of $1,300 for the third consecutive session.

A bearish start to the day saw ETH fall to an early morning low of $1,169. ETH fell through the First Major Support Level (S1) at $1,188 before rallying to an early afternoon high of $1,289. ETH broke through the First Major Resistance Level (R1) at $1,261 before sliding back to end the day at sub-$1,250.

On Monday, bitcoin (BTC) rose by 1.72%. Partially reversing a 2.80% fall from Sunday, BTC ended the day at $16,626. Notably, BTC logged the second gain from nine sessions while ending the day at sub-$17,000 for the fourth time since 2020.

A bearish start to the day saw BTC slide to an early low of $15,822. BTC fell through the First Major Support Level (S1) at $16,081. However, steering clear of the Second Major Support Level (S2) at $15,818, BTC rallied to an early afternoon high of $17,200. BTC broke through the First Major Resistance Level (R1) at $16,782 before ending the day at $16,626.

News of Binance launching a recovery fund delivered a bullish Monday session. However, the upside was modest, with details scarce on the fund’s mechanics. Unknowns include the size of the fund, the criteria to qualify for aid, and the terms of a bailout.

The markets may need to see the recovery fund in action to get a sense of how the fund will work and support projects impacted by the collapse of FTX.

Nonetheless, short of an FTX bailout, the recovery fund will provide a much-needed cushion to reduce contagion risk.

This morning, a lack of crypto events allowed investors to tiptoe back into the market at depressed price levels. However, downside risks remain, with another exchange collapse a threat.

For investors tracking the NASDAQ Composite Index, BTC and ETH decoupled in the wake of the FTX collapse. US economic indicators could test the crypto waters later today. Signs of crypto sensitivity to US wholesale inflation figures and the NASDAQ would signal more orderly market conditions.

A spike in US wholesale inflation could raise doubts over a December Fed pivot, which would be NASDAQ and crypto negative.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 1.39% to $1,259. A mixed morning saw ETH fall to a low of $1,123 before rising to a high of $1,278.

Technical Indicators

ETH needs to avoid the $1,233 pivot to retarget the First Major Resistance Level (R1) at $1,298 and $1,300. An ETH move through the Monday high of $1,289 would signal a bullish afternoon session.

In the event of an extended rally, ETH would likely test the Second Major Resistance Level (R2) at $1,353. The Third Major Resistance Level (R3) sits at $1,473.

A fall through the pivot would bring the First Major Support Level (S1) at $1,178 into play. However, barring another extended afternoon sell-off, ETH should avoid sub-$1,150 and the Second Major Support Level (S2) at $1,113.

The Third Major Support Level sits at $993.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,309. The 50-day EMA eased back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($1,298) and the 50-day EMA ($1,309) would bring R2 ($1,353) and the 100-day EMA ($1,371) into play. However, failure to move through the 50-day EMA would leave ETH under pressure.

Bitcoin (BTC) Price Action

BTC was up 1.17% to $16,821. A mixed morning saw BTC fall to a low of $16,543 before rising to a high of $17,001.

Technical Indicators

BTC needs to avoid the $16,549 pivot to target the First Major Resistance Level (R1) at $17,277. A return to $17,000 would signal a bullish session. However, the direction will hinge on FTX updates, contagion news, and Binance recovery fund details.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,927 and resistance at $18,000.

The Third Major Resistance Level (R3) sits at $19,305.

A fall through the pivot would bring the First Major Support Level (S1) at $15,899 into play. Barring another extended sell-off, BTC should avoid sub-$15,000. The Second Major Support Level (S2) at $15,171 should limit the downside. However, negative FTX-related news could send BTC to sub-$15,000.

The Third Major Support Level (S3) sits at $13,793.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $17,581. The 50-day EMA slipped back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($17,277) would give the bulls a run at the 50-day EMA ($17,581) and R2 ($17,927). However, failure to move through the 50-day EMA would leave BTC under pressure and S1 ($15,899) in view.