BTC Bulls to Target $27,500 on Easing Risks of a US Default

Key Insights:

• On Friday, BTC gained 0.90% to end the day at $26,736.
• Continued progress toward raising the US debt ceiling and the NASDAQ Composite Index delivered support, while Fed Fear capped the upside.
• However, the technical indicators remain bearish, signaling a fall to sub-$25,000.

On Friday, bitcoin (BTC) rose by 0.90%. Following a 0.58% gain on Thursday, BTC ended the day at $26,736. Significantly, BTC fell short of the $27,000 handle for the second consecutive session.

A bearish start to the day saw BTC fall to an early morning low of $26,359. Steering clear of the First Major Support Level (S1) at $26,041, BTC rose to an early afternoon high of $26,947. BTC briefly broke through the First Major Resistance Level (R1) at $26,799 before easing back to end the day at $26,736.

US Debt Ceiling Updates Delivered Support

It was a busy Friday session. US economic indicators and US debt ceiling-related news provided BTC and the broader crypto market direction.

A pickup in US inflationary pressure failed to spook investors, with US economic indicators showing the US economy picking up momentum.

The Core PCE Price Index increased by 4.7% year-over-year versus 4.6% in March. However, core durable goods orders rose by 0.4% in April versus a forecasted 0.3% increase, with personal spending surging by 0.8% versus an expected 0.4% rise.

Michigan Consumer Sentiment figures also beat expectations, with the Index falling from 63.5 to 59.2. Economists forecast the Index to decline to 57.9.

The pickup in inflation and the better-than-expected personal spending and consumer sentiment figures fueled expectations of a 25-basis point June interest rate hike.

According to the CME FedWatch Tool, the probability of a June hike increased from 51.7% to 64.2% on Friday.

While the bets of a more hawkish Fed were price negative, the progress towards raising the US debt ceiling and avoiding a US default drove demand for riskier assets.

The NASDAQ Composite Index rallied 2.19%, with the Dow and S&P 500 seeing gains of 1.00% and 1.30%, respectively.

The Day Ahead

It is a quiet Saturday session. There are no economic indicators for investors to consider, leaving chatter from Washington and the crypto news wires to influence.

With the chances of a US default subsiding, investors will likely turn their attention to the Fed and the SEC v Ripple case. This week, Ripple CEO Brad Garlinghouse spoke optimistically about a Ripple victory that should be a boon for the crypto industry.

The White House may need to dial down its anti-crypto rhetoric should the infamous William Hinman speech-related documents tarnish the reputation of the SEC and SEC Chair Gary Gensler.

Investors should track SEC v Ripple updates and Binance and Coinbase (COIN)-related news.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.23% to $26,675. A bearish start to the day saw BTC fall from an opening price of $26,737 to a low of $26,674.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to move through the $26,681 pivot to target the First Major Resistance Level (R1) at $27,002. A move through the Friday high of $26,947 would signal an extended bullish session. The 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 $27,269 and resistance at $27,500. The Third Major Resistance Level (R3) sits at $27,857.

Failure to move through the pivot would leave the First Major Support Level (S1) at $26,414 in play. However, barring another risk-off-fueled sell-off, BTC should avoid sub-$26,000. The Second Major Support Level (S2) at $26,093 should limit the downside. The Third Major Support Level (S3) sits at $25,505.

Looking at the EMAs and the 4-hourly candlestick chart (below), the EMAs are bearish. BTC sat below the 50-day EMA ($26,789). The 50-day EMA eased back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, sending bearish signals.

A move through the 50-day EMA ($26,789) would support a breakout from R1 ($27,002) and 100-day EMA ($27,075) to give the bulls a run at R2 ($27,269) and $27,500. However, failure to move through the 50-day EMA ($26,789) would leave S1 ($26,414) in view. A move through the 50-day EMA would send a bullish signal.