ETH Bears Eye Sub-$1,180 on Recession Fears and a Bearish NASDAQ

Key Insights:

• On Tuesday, bitcoin (BTC) and ethereum (ETH) joined the broader crypto market in negative territory, with BTC seeing red for the seventh time in ten sessions.
• The NASDAQ delivered a choppy session, with Fed and Recession fears, ultimately leaving the Index and the crypto market in the red.
• Crypto market conditions deteriorated further this morning, with investors cautious as the markets continue to reopen after the holidays.

Ethereum (ETH) fell by 1.38% on Tuesday. Reversing a 0.82% gain from Monday, ETH ended the day at $1,211. Despite the bearish session, ETH ended the day at $1,200 for the eighth consecutive session.

A bullish start to the day saw ETH rise to an early morning high of $1.234 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $1,236, ETH slid to a late afternoon low of $1,200. ETH fell through the First Major Support Level (S1) at $1,214 to end the day at $1,211. The Second Major Support Level (S2) at $1,200 limited the downside.

On Tuesday, bitcoin (BTC) fell by 1.33%. Reversing a 0.59% gain from Monday, BTC ended the day at $16,720. Notably, BTC failed to revisit $17,000 for the seventh consecutive session while seeing red for just the seventh time in ten sessions.

A choppy start to the day saw BTC rise to an early morning high of $16,987. However, coming up short of the First Major Resistance Level (R1) at $17,001, BTC slid to an early evening low of $16,617. BTC fell through the First Major Support Level (S1) at $16,852 and the Second Major Support Level (S2) at $16,759 to end the day at $16,720.

Recession and Fed Fears Send the NASDAQ and Cryptos into the Red

It was a quiet Tuesday session. While European and US markets reopened after the holidays, there was no crypto news to draw interest. The lack of material events left BTC and ETH in the hands of the NASDAQ Index.

Going into the Tuesday session, the NASDAQ mini delivered much-needed support. The Chinese government announced further COVID-19 easing measures to support riskier assets.

However, the bullish sentiment was short-lived. Fears of a surge in demand for raw materials ignited fears of another pickup in inflationary pressure that would force the Fed to make more hawkish policy moves.

The NASDAQ Index fell by 1.38% on Tuesday, with the NASDAQ mini down 3 points this morning.

Today, there are no US economic indicators to influence, leaving the crypto news wires and the NASDAQ Index to guide investors. A hawkish Fed and the threat of an economic hard landing raise the prospects of the crypto winter extending into Q2 2023.

Economic and regulatory uncertainty will likely continue to test investors as FTX news swamps the crypto news wires.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 1.55% to $1,192. A mixed morning saw ETH rise to an early high of $1,215 before falling to a low of $1,187.

ETH fell through the First Major Support Level (S1) at $1,196.

Technical Indicators

ETH will need to move through S1 and the $1,215 pivot to target the First Major Resistance Level (R1) at $1,230 and the Tuesday high of $1,234. A return to $1,230 would signal a bullish afternoon session. However, the crypto news wires and the NASDAQ Index need to deliver support for a breakout session.

In the event of an extended rally, the bulls would likely take a run at the Second Major Resistance Level (R2) at $1,249. The Third Major Resistance level (R3) sits at $1,283.

Failure to move through S1 and the pivot would bring the Second Major Support Level (S2) at $1,181 into play. However, barring an event-driven sell-off, ETH should avoid sub-$1,180. The Third Major Support Level (S3) sits at $1,147.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,216. The 50-day EMA slid back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($1,216) would bring the 100-day EMA ($1,223) and R1 ($1,230) into play. However, failure to move through the 50-day EMA ($1,216) would leave ETH under pressure.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down by 0.51% to $16,634. A mixed start to the day saw BTC rise to an early high of $16,759 before falling to a low of $16,575.

Technical Indicators

BTC needs to move through the $16,775 pivot to target the First Major Resistance Level (R1) at $16,932. A BTC return to $16,900 would signal a bullish session. However, the crypto news wires and the NASDAQ Index need to be crypto-friendly to support a breakout session.

In the event of an extended rally, BTC would test the Second Major Resistance Level (R2) at $17,145. The Third Major Resistance Level (R3) sits at $17,515.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,562 in play. Barring a crypto risk-off-fueled sell-off, BTC should avoid sub-$16,200. The Second Major Support Level (S2) at $16,405 should limit the downside. The Third Major Support Level (S3) sits at $16,035.

An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA, currently at $16,845. The 50-day EMA slid back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($16,845) would support a breakout from the 100-day EMA ($16,907) and R1 ($16,932) to target the 200-day EMA ($17,071) and R2 ($17,145). However, failure to move through the 50-day EMA ($16,845) would bring the Major Support Levels into play.