BTC Bears Eye Sub-$26,000 on Anti-Crypto Biden and Debt Talks

Bob Mason
Published: May 22, 2023, 00:35 GMT+00:00

BTC found early support today. However, US debt ceiling talks and anti-crypto rhetoric from the US administration will test buyer appetite.

BTC technical analysis - FX Empire

In this article:

Key Insights:

  • On Sunday, BTC fell by 1.35% to end the session at $26,760.
  • Debt ceiling jitters resurfaced on Sunday, with investors awaiting the US President and Speaker of the House meeting.
  • The technical indicators remained bearish, signaling a return to sub-$26,000.

On Sunday, bitcoin (BTC) fell by 1.35%. Reversing a 0.80% gain from Saturday, BTC ended the week down 0.66% to $26,760. Despite the bearish session, BTC avoided sub-$26,500 for the third consecutive session.

A bullish start to the day saw BTC rise to a first-hour high of $27,297. BTC briefly broke through the First Major Resistance Level (R1) at $27,242 before hitting reverse. The reversal saw BTC fall to a late-session low of $26,693. BTC fell through the First Major Support Level (S1) at $26,937 and briefly through the Second Major Support Level (S2) at $26,747.

US Debt Ceiling Woes Overshadowed Subsiding Fed Fear

It was a quiet Sunday, with no crypto events to move the dial. The lack of crypto news left investors to monitor debt ceiling updates from Washington.

Hopes vanished of US President Joe Biden and Speaker of the House Kevin McCarthy reaching a deal on Sunday on news that talks would begin today. However, the US President addressed the debt ceiling issue at the G7 to the detriment of BTC and the broader crypto market.

President Biden had this to say,

“I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistants at risk.”

The anti-crypto rhetoric, and the ongoing threat of a US default, sent the crypto market into the red.

This morning, the NASDAQ mini reflected sentiment toward the debt ceiling crisis, falling by 12.75 points. The downside came despite the further market reaction to less hawkish Fed Chair Powell chatter from Friday.

NASDAQ correlation.
NASDAQ – BTCUSD 210523 Daily Chart

The Day Ahead

It is a relatively busy Monday session. While there are no US economic indicators for investors to consider, Fed chatter will influence the afternoon. FOMC members Bullard, Bostic, and Barkin are on the calendar to speak. Hawkish commentary would refuel bets on a June interest rate hike, a bearish price scenario.

However, we expect US debt ceiling-related news to have more impact on market risk sentiment. Progress toward a deal would provide support.

While Fed chatter and debt ceiling news will be the focal points, investors should track the crypto news wires for SEC v Ripple updates and Binance and Coinbase (COIN)-related news.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.13% to $26,794. A bullish start to the day saw BTC rise from an opening price of $26,760 to a high of $26,797.

BTC finds early support.
BTCUSD 220523 Daily Chart

BTC Technical Indicators

Resistance & Support Levels

R1 – $ 27,140 S1 – $ 26,536
R2 – $ 27,521 S2 – $ 26,313
R3 – $ 28,125 S3 – $ 25,709

BTC needs to move through the $26,917 pivot to target the First Major Resistance Level (R1) at $27,140 and the Sunday high of $27,297. A return to $27,000 would signal an extended bullish session. The crypto news wires and US debt ceiling-related news 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 $27,521. The Third Major Resistance Level (R3) sits at $28,125.

Failure to move through the pivot would leave the First Major Support Level (S1) at $26,536 in play. However, barring a risk-off-fueled sell-off, BTC should avoid sub-$26,000. The Second Major Support Level (S2) at $26,313 should limit the downside. The Third Major Support Level (S3) sits at $25,709.

BTC support levels in play below the pivot.
BTCUSD 220523 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($27,081). The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, sending bearish signals.

A move through the 50-day EMA ($27,081) and R1 ($27,140) would give the bulls a run at the 100-day EMA ($27,391) and R2 ($27,521). However, failure to move through the 50-day EMA ($27,081) would leave S1 ($26,536) in view. A move through the 50-day EMA would be a bullish signal.

EMAs are bearish.
BTCUSD 220523 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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