BTC Bears Eye an Eight Day Losing Streak on US Debt Ceiling Woes

Key Insights:

• On Friday, BTC extended its losing streak to seven sessions, falling by 0.73% to end the day at $26,818.
• Weakening consumer sentiment and a lack of progress toward raising the US debt ceiling left BTC in the red.
• The technical indicators were bearish, signaling a return to sub-$26,000.

On Friday, bitcoin (BTC) fell by 0.73%. Following a 2.19% loss on Thursday, BTC ended the day at $26,818. Significantly, BTC extended its losing streak to seven sessions and ended the day at sub-$27,000 for the first time since March 18.

It is the longest losing streak since a seven-day reversal in July 2022. BTC had an eight-day losing streak in June 2022.

A mixed start to the day saw BTC rise to an early high of $27,125 before hitting reverse. Falling short of the First Major Support level (S1) at $27,515, BTC fell to an early evening low of $25,857. BTC briefly fell through the First Major Support Level (S1) at $26,656 and the Second Major Support Level (S2) at $26,296 before wrapping up the day at $26,818.

US Debt Ceiling and Economic Indicators Leave BTC in Negative Territory

It was a busy end to the week. US consumer sentiment and expectations numbers for May drew interest as the markets monitored debt ceiling updates from Capitol Hill.

The Michigan Consumer Sentiment Index fell from 63.5 to 57.7, with the Expectations Index down from 60.5 to 53.4. Economists forecast more modest declines to 63.0 and 59.8, respectively.

Consumer concerns about the economic outlook and the debt crisis weighed. Inflation expectations were mixed, with consumers expecting year-ahead inflation to soften from 4.6% to 4.5% while projecting long-run inflation expectations to rise from 3.0% to 3.2%.

The US debt ceiling crisis fueled the bearish mood, leaving the NASDAQ Composite Index down 0.35%.

The Day Ahead

It is a quiet day ahead. There are no US economic indicators for investors to consider. However, updates on the US debt ceiling will continue to draw interest.

While policymakers attempt to reach an agreement to raise the debt ceiling, US lawmakers and crypto regulatory activity will remain a focal point. Investors should track SEC v Ripple case updates, with a Court ruling likely to have a material impact on the US regulatory landscape. Binance and Coinbase (COIN)-related news will also need monitoring.

On Friday, Binance announced plans to withdraw from the Canadian market, saying,

“Unfortunately, today we are announcing that Binance will be joining other prominent crypto businesses proactively withdrawing from the Canadian marketplace.”

Binance.US and Coinbase are currently facing lawmaker and regulatory scrutiny in the US.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.16% at $26,861. A range-bound start to the day saw BTC fall to an early low of $26,727 before rising to a high of $26,997.

Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $26,600 pivot to target the First Major Resistance Level (R1) at $27,343. A move through the Friday high of $27,125 would signal an extended bullish session. The crypto news wires and US debt ceiling talks 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 $27,868 and resistance at $28,000. The Third Major Resistance Level (R3) sits at $29,136.

A fall through the pivot would bring the First Major Support Level (S1) at $26,075 into play. However, barring a crypto event-fueled sell-off, BTC should avoid sub-$25,000. The Second Major Support Level (S2) at $25,332 should limit the downside. The Third Major Support Level (S3) sits at $24,064.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($27,673). The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, sending bearish signals.

A move through R1 ($27,343) would give the bulls a run at the 50-day EMA ($27,673) and R2 ($27,868). However, failure to move through the 50-day EMA would leave S1 ($26,075) and sub-$26,000 Major Support Levels in view.