BTC at Risk of Sub-$27,000 as Investors Consider the Silk Road Offload

Key Insights:

• BTC had a bearish Monday, falling by 1.34% to the day at $27,795.
• Economic indicators from China and the US weighed on BTC and the broader crypto market.
• However, the technical indicators are bullish, with $30,000 in view.

On Monday, bitcoin (BTC) fell by 1.34%. Following a 0.95% decline on Sunday, BTC ended the day at $27,795. BTC extended the losing streak to three sessions.

After a bearish start to the day, BTC rose to a late morning high of $28,500. Coming up against the First Major Resistance Level (R1) at $28,512, BTC fell to a late low of $27,213. BTC fell through the First Major Support Level (S1) at $27,836 and briefly through the Second Major Support Level (S2) at $27,500 before wrapping up the day at $27,795.

Economic Indicators and the US Government Send BTC South

On Monday, manufacturing sector PMI numbers from China and the US tested investor appetite.

The all-important Chine Caixin Manufacturing PMI fell from 51.6 to 50.0. Weak overseas demand weighed on production and the headline PMI. Things were no better in the US, with the ISM Manufacturing PMI falling from 47.7 to 46.3.

News of the US government planning to offload 41,491 BTC in four batches was also bearish.

The US government seized approximately 51,680.33 BTC worth more than $3.4 billion. The funds came from illegal activity on Silk Road, an online “darknet” black market. Bitcoin was the only form of payment on the Silk Road platform.

The Day Ahead

Later today, US JOLTs job openings will influence the afternoon session. With the US Jobs report out on Friday, we expect market sensitivity to the numbers.

Away from the economic calendar, regulatory activity and US lawmaker chatter will continue to influence. However, updates from the ongoing SEC v Ripple case and Binance and Coinbase (COIN)-related news will move the dial.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.18% to $27,744. A mixed start to the day saw BTC rise to an early high of $27,855 before falling to a low of $27,740.

Technical Indicators

BTC needs to move through the $28,836 pivot to target the First Major Resistance Level (R1) at $28,459 and the Monday high of $28,500. A return to $28,500 would signal an extended bullish session. The US economic indicators and the crypto news wires 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 $29,123 and resistance at $29,500. The Third Major Resistance Level (R3) sits at $30,410.

Failure to move through the pivot would leave the First Major Support Level (S1) at $27,172 in play. However, barring another sell-off, BTC should avoid sub-$27,000 and the Second Major Support Level (S2) at $26,549. The Third Major Support Level (S3) sits at $25,262.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a mixed signal. BTC sat above the 100-day EMA ($27,371). The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, sending mixed signals.

A move through the 50-day EMA ($27,973) would support a breakout from R1 ($28,459) to target R2 ($29,123) and $30,000. However, a fall through the 100-day EMA ($27,973) and S1 ($27,172) would bring S2 ($26,549) into view. A move through the 50-day EMA would send a bullish signal.