ETH and a Return to $1,800 in the Hands of the Fed and Hard Fork News

Key Insights:

• It was a bearish Thursday session for bitcoin (BTC) and ethereum (ETH), with BTC revisiting the $25,000 handle before hitting reverse.
• US economic indicators and FOMC member chatter weighed on riskier assets.
• However, sentiment improved this morning as investors refocused on easing regulatory.

Ethereum (ETH) fell by 2.21% on Thursday. Partially reversing a 7.58% slide from Wednesday, ETH ended the day at $1,638. Despite the bearish session, ETH avoided sub-$1,600 for the first time since February 8.

After a range-bound morning, ETH rallied to a late afternoon high of $1,743 before hitting reverse. ETH broke through the First Major Resistance Level (R1) at $1,725. The reversal saw ETH slide to a final-hour low of $1,634. However, steering clear of the First Major Support Level (S1) at $1,583, ETH ended the day at $1,638.

On Thursday, bitcoin (BTC) fell by 3.24%. Partially reversing a 9.95% rally on Wednesday, BTC ended the day at $23,529. Despite the bearish session, BTC revisited $25,000 levels for the first time since August.

After a range-bound morning, BTC rose to an early afternoon high of $25,234 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $25,113 before sliding to a final-hour low of $23,526. Steering clear of the First Major Support Level (S1) at $22,802, BTC ended the day at $23,529.

Fed Fear Overshadows Easing Regulatory Risk Jitters

On Thursday, US economic indicators and FOMC member commentary weighed on market risk sentiment. Hotter-than-expected inflation numbers and tight labor market conditions supported hawkish Fed chatter, which left the NASDAQ Composite Index and the broader crypto market with losses.

The latest round of US stats has impressed and, with inflation elevated, supports a more hawkish Fed policy outlook. However, a more aggressive interest rate trajectory could refuel fears of a US hard landing.

Fed Fear overshadowed easing regulatory risk jitters that supported the bullish Wednesday and early Thursday afternoon highs.

Updates on the testing of the Shapella testnet had a muted impact on ETH, with investors hopeful of a Shanghai hard fork in March.

The Day Ahead

With BTC and ETH in recovery mode, we expect continued investor sensitivity to hawkish Fed chatter. An increasing number of FOMC members favoring more aggressive policy moves to curb inflation would weigh on riskier assets.

While Fed Fear remains a consideration, we expected increased sensitivity to regulatory and US lawmaker commentary. This week, US lawmakers have delivered crypto support. However, some US lawmakers favor a US ban on crypto. Considering the contrasting views, the need for a crypto regulatory framework has become more critical.

In the afternoon session, there are no US economic indicators to distract investors. The lack of stats will leave the NASDAQ Composite Index and crypto news wires to guide investors.

Investors should continue monitoring the crypto news wires for FTX, Genesis, and Silvergate Bank updates. However, SEC activity and US lawmaker chatter will also need consideration.

For Ethereum, investors also need to consider developer updates from testing the Shapella testnet.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 1.62% to $1,664. A mixed morning saw ETH fall to an early low of $1,630 before rising to a high of $1,670.

Technical Indicators

ETH needs to move through the $1,672 pivot to target the First Major Resistance Level (R1) at $1,709 and the Thursday high of $1,743. A return to $1.700 would signal a breakout session. However, Shanghai hard fork updates and the crypto news wires should be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,781 and resistance at $1,800. The Third Major Resistance Level (R3) sits at $1,890.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,600 in play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,550. The Second Major Support Level (S2) at $1,563 should limit the downside. The Third Major Support Level (S3) sits at $1,454.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 50-day EMA, currently at $1,597. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1,600) and the 50-day EMA ($1,597) would support a breakout from R1 ($1,709) to target R2 ($1,781) and $1,800. However, a fall through S1 ($1,600) and the 50-day ($1,597) and 100-day ($1,591) EMAs would give the bears a run at S2 ($1,563). The 200-day EMA sits at $1,555. A fall through the 50-day EMA would send a bearish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.39% to $23,855. A mixed morning saw BTC fall to an early low of $23,350 before rising to a high of $23,911.

Technical Indicators

BTC needs to move through the $24,096 pivot to target the First Major Resistance Level (R1) at $24,667 and the Thursday high of $25,234. A return to $25,000 would signal a breakout session. The crypto news wires need to 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 $25,804 and resistance at $27,000. The Third Major Resistance Level (R3) sits at $27,512.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,959 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,388.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($22,878). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($22,959) and the 50-day EMA ($22,878) would support a breakout from R1 ($24,667) to target R2 ($25,804) and $27,000. However, a fall through S1 ($22,959) and 50-day EMA ($22,878) would give the bears a run at the 100-day EMA ($22,673) and S2 ($22,388). A fall through the 50-day EMA would send a bearish signal.