BTC Bulls to Target $31,000 on US Lawmaker and Regulator Division

Key Insights:

• BTC bounced back on Tuesday, gaining 3.24% to end the day at $30,391.
• SEC Chair Grilling on Capitol Hill and economic indicators from China deliver a breakout session.
• The technical indicators are bullish, signaling a run at $31,000.

On Tuesday, bitcoin (BTC) rallied by 3.24%. Reversing a 2.80% loss from Monday, BTC ended the day at $30,391.

A mixed start to the day saw BTC fall to an early morning low of $29,169. Steering clear of the First Major Support Level (S1) at $29,036, BTC rose to a mid-day high of $30,527. BTC broke through the First Major Resistance Level (R1) at $30,064 before briefly falling to sub-$30,000. However, BTC broke back through R1 to wrap up the day at $30,391.

Gary Gensler Grilling and Macroeconomic Data Deliver a Rebound

In the morning session, better-than-expected GDP numbers from China delivered a morning boost. It was also a busy afternoon session. While there were no US economic indicators for investors to digest, Fed commentary and US corporate earnings drew interest.

Mixed FOMC member views on Fed monetary policy and mixed corporate earnings failed to support the appetite for riskier assets. Goldman Sachs (GS) reported a slump in profits, with Johnson & Johnson (JNJ) warning of the effects of elevated inflation.

The NASDAQ Composite Index (-0.04%) and the Dow (-0.03) ended the day flat, while the S&P 500 gained just 0.09%.

A quiet US session left the markets to focus on Capitol Hill and the Gary Gensler grilling. The heavily anticipated digital currency sub-Committee hearing did not disappoint. House Financial Services Committee Chair Patrick McHenry referenced the SEC’s regulation by enforcement mantra, saying,

“Your approach is driving innovation overseas and endangering American competitiveness.”

McHenry also said,

“Regulation by enforcement is not sufficient nor sustainable. You’re punishing digital asset firms for allegedly not adhering to the law when they don’t know it will apply to them.”

The SEC Chair had this to say,

“We have a clear regulatory framework built up over 90 years.”

Talking about the exchanges, Gensler added,

“Just a bunch of intermediaries in this market think they have a choice. They don’t have a choice.”

The hearing and extended Gary Gensler testimony were sufficient for investors, with the hearing a reflection of division on Capitol Hill. Significantly, Gensler’s stance on cryptos will put greater attention on the outcome of the SEC v Ripple case that could allow the CFTC to take control of the digital asset space.

The Day Ahead

Investors should continue monitoring the crypto news wires for SEC v Ripple case-related chatter and Binance and Coinbase (COIN)-related news. However, US lawmaker commentary and SEC and CFTC activity would also move the dial.

This afternoon, there are no US economic indicators for investors to consider. The lack of stats will leave Fed chatter to draw interest. Hawkish Fed commentary highlighting the need for further interest rate hikes beyond May would be BTC bearish.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.26% to $30,311. A mixed start to the day saw BTC rise to an early high of $30,412 before falling to a low of $30,304.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $30,029 pivot to target the First Major Resistance Level (R1) at $30,889. A move through the morning high of $30,412 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 $31,387 and resistance at $31,500. The Third Major Resistance Level (R3) sits at $32,745.

A fall through the pivot would bring the First Major Support Level (S1) at $29,531 into play. However, barring an event-fueled sell-off, BTC should avoid sub-$29,000 and the Second Major Support Level (S2) at $28,671. The Third Major Support Level (S3) sits at $27,313.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bullish signals. BTC sat above the 50-day EMA ($29,835). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening further from the 200-day EMA, sending bullish signals.

A hold above the 50-day EMA ($29,835) would support a breakout from R1 ($30,889) to target R2 ($31,387) and $31,500. However, a fall through 50-day EMA ($29,835) would bring S1 ($29,531) and the 100-day EMA ($29,263) into view. A fall through the 50-day EMA would send a bearish signal.