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

Bob Mason
Updated: May 29, 2023, 05:03 GMT+00:00

After a bullish Friday, BTC was in the red this morning. Rising expectations of a June Fed interest rate hike overshadowed progress towards a debt deal.

BTC technical analysis - FX Empire

In this article:

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.

NASDAQ Composite Index correlation.
NASDAQ – BTCUSD 270523 Hourly Chart

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 sees early red.
BTCUSD 270523 Daily Chart

BTC Technical Indicators

Resistance & Support Levels

R1 – $ 27,002 S1 – $ 26,414
R2 – $ 27,269 S2 – $ 26,093
R3 – $ 27,857 S3 – $ 25,505

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.

BTC support levels in play below the pivot.
BTCUSD 270523 Hourly Chart

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.

EMAs are bearish.
BTCUSD 270523 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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