BTC Bears to Target Sub-$27,500 on Regulatory Angst and Government News

Key Insights:

• BTC had a bearish Sunday, falling by 0.95% to the day at $28,173.
• News of the US government planning to offload 41,491 BTC in four batches weighed on investor sentiment.
• However, the technical indicators are bullish, with $30,000 in view.

On Sunday, bitcoin (BTC) fell by 0.95%. Following a 0.06% decline on Saturday, BTC ended the week up 0.70% to $28,173. Despite the bearish session, BTC held onto the $28,000 handle for the fifth consecutive session.

A mixed start to the day saw BTC rise to an early high of $28,515. Coming up short of the First Major Resistance Level (R1) at $28,773, BTC fell to a late low of $27,839. BTC briefly fell through the First Major Support Level (S1) at $28,157 and through the Second Major Support Level (S2) at $27,871 before wrapping up the day at $28,173.

US Government Plans to Dump 41,491 BTC Weigh on Sentiment

The US Government disclosed a March 14 sale of 9,861 BTC and plans to offload 41,491 BTC in four batches during 2023. According to the filing, the US government seized approximately 51,680.33 BTC worth more than $3.4 billion at the time of seizure.

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.

While the BTC showed little reaction to the March 14 sale, market conditions will dictate the impact on BTC and the broader crypto market.

Increased regulatory scrutiny added to the bearish mood. Regulatory risk has spiked, forcing crypto exchanges to reevaluate their US presence, creating market uncertainty. News of crypto exchange Bittrex planning to shutter its US operations and Coinbase (COIN) looking to expand outside the US could be an ominous sign.

A Ripple victory in the SEC v Ripple case should ease the pain and level of SEC scrutiny plaguing the digital asset space.

The Day Ahead

Regulatory and lawmaker activity will remain a focal point at the start of the week. Binance and Coinbase (COIN)-related updates will move the dial. However, investors should also track the crypto news wires for updates from the ongoing SEC v Ripple case. Rulings in favor of Ripple would send bullish signals.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.05% to $28,158. A bearish start to the day saw BTC fall from an opening price of $28,173 to a low of $28,156.

Technical Indicators

BTC needs to move through the $28,176 pivot to target the First Major Resistance Level (R1) at $28,512 and the Sunday high of $28,515. A return to $28,500 would signal an extended bullish session. 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 $28,852 and resistance at $29,000. The Third Major Resistance Level (R3) sits at $29,528.

Failure to move through the pivot would leave the First Major Support Level (S1) at $27,836 in play. However, barring a crypto event-fueled sell-off, BTC should avoid sub-$27,500. The Second Major Support Level (S2) at $27,500 should limit the downside. The Third Major Support Level (S3) sits at $26,824.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($27,994). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, sending bullish signals.

A hold above the 50-day EMA ($27,994) would support a breakout from R1 ($28,512) to target R2 ($28,852) and $29,000. However, a fall through the 50-day EMA ($27,994) and S1 ($27,836) would bring S2 ($27,500) into view. A fall through the 50-day EMA would send a bearish signal.