BTC Bears to Target Sub-$26,000 on Hawkish Fed Chatter

Key Insights:

• On Sunday, BTC ended its longest losing stretch since June 2022, rising by 0.55% to end the day at $26,937.
• Easing fears of a US government default on payments delivered modest support.
• However, the technical indicators remained bearish, signaling a return to sub-$26,000.

On Sunday, bitcoin (BTC) rose by 0.55%. Reversing a 0.10% loss from Saturday, BTC ended the week down 5.43% to $26,937. Significantly, BTC ended an eight-day losing streak, the longest stretch of losses since June 2022.

A bearish start to the day led BTC to a first-hour low of $26,603. Finding support at the First Major Support Level (S1) at $26,645, BTC rose to a mid-afternoon high of $27,205. BTC broke through the First Major Support level (S1) at $27,003 to test the Second Major Resistance Level (R2) at $27,216 before easing back to end the day at $26,937.

US Debt Ceiling Jitters Subside Ahead of a Busy Week

It was a quiet Sunday session. There were no US economic indicators to influence, leaving BTC in the hands of US debt ceiling-related news and the crypto news wires.

Over the weekend, US President Joe Biden provided some comfort, reportedly saying both sides are interested in reaching an agreement. The fallout from a US government default on payments would weigh on riskier assets.

President Biden will meet policymakers on Tuesday to progress talks, leaving BTC in limbo.

The Day Ahead

Chatter from Capitol Hill and regulatory activity will remain focal points. However, SEC v Ripple case updates and Binance and Coinbase (COIN)-related news will also need monitoring. Court rulings from the SEC v Ripple case would materially influence BTC price action.

Beyond the crypto market, the US economic calendar will also provide direction.

NY Empire State Manufacturing Index numbers for May will be in focus this afternoon. Economists forecast a fall from 10.8 to -2.5. An Index return to negative territory would fuel recessionary jitters and weigh on BTC and the broader crypto market.

However, while the stats will draw interest, investors should monitor FOMC member speeches. FOMC members Kashkari, Bostic, and Barkin will speak today. Hawkish chatter would be bearish as investors search for clues on what is next from the Fed.

According to the CME FedWatch Tool, there was a 14.4% chance of a 25-basis point interest rate hike in June, down from 15.5% on Friday.

The US banking sector and the US debt ceiling will also need monitoring.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.04% to $26,948. A range-bound start to the day saw BTC rise from an opening price of $26,939 to a high of $26,951.

Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $26,915 pivot to target the First Major Resistance Level (R1) at $27,227. A move through the Sunday high of $27,205 would signal an extended bullish session. The crypto news wires and the US economic calendar 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 $27,517 and resistance at $28,000. The Third Major Resistance Level (R3) sits at $28,119.

A fall through the pivot would bring the First Major Support Level (S1) at $26,625 into play. However, barring a crypto event-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 $25,711.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($27,396). 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 ($27,227) would give the bulls a run at the 50-day EMA ($27,396) and R2 ($27,517). However, failure to move through the 50-day EMA would leave S1 ($26,625) in view.