ETH Bears to Target $1,350 on Contrasting SEC and CFTC Views

Key Insights:

• On Friday, ethereum (ETH) slipped by 0.35% to end the day at sub-$1,500 for the second consecutive session.
• The collapse of Silicon Valley Bank weighed on investor sentiment, while US economic indicators cushioned the downside.
• Technical indicators remain bearish, with sub-$1,350 in view.

Ethereum (ETH) fell by 0.35% on Friday. Following a 6.20% on Thursday, ETH ended the day at $1,432. ETH ended the day at sub-$1,500 for the second time since January 13.

A bearish start to the day saw ETH fall to a late morning low of $1,370. ETH fell through the First Major Support Level (S1) at $1,381 before rising to a late afternoon high of $1,439. However, falling short of the First Major Resistance Level (R1) at $1,520, ETH fell back to end the day in the red.

Shanghai Upgrade Overshadowed by US Banking Sector Woes

There were no updates on the delayed Shanghai upgrade to distract investors from the US economic calendar and the crypto news wires.

On March 14, the developers will release the Goerli Testnet, a trial run of the Shanghai upgrade now delayed until April. With little else for investors to consider, the all-important US Jobs Report drew interest in the afternoon session.

A larger-than-expected increase in nonfarm payrolls and a slower pace of wage growth delivered mixed signals. While the US unemployment rate rose from 3.4% to 3.6%, the levels reflect tight labor market conditions, supporting a more aggressive Fed policy outlook.

However, the US banking sector woes weighed on ETH and the broader crypto market. On Friday, news hit the wires of US regulators shutting down Silicon Valley Bank (SIVB). The news sent riskier assets into the deep red. The NASDAQ Composite Index fell by 1.76%, with the Dow and S&P 500 seeing losses of 1.07% and 1.45%, respectively.

The collapse of SVB came hot on the heels of the news of Silvergate Bank planning to liquidate. On Friday, US banking giants Goldman Sachs (GS) slid by 4.22% on contagion jitters, with Morgan Stanley (MS) and Bank of America (BAC) seeing losses of 2.16% and 0.88%, respectively.

While the broader crypto market succumbed to the latest US banking crisis, ETH was also a hot topic.

On Thursday, the State of New York filed a lawsuit against KuCoin for breaching securities laws by offering tokens, including ETH. The battle for the crypto market rages on. This week, CFTC Chair labeled ethereum a commodity, while SEC Chair Gary Gensler has insisted that all cryptos, except bitcoin (BTC), are securities.

Ripple counsel Stuart Alderoty had this to say about the SEC Chair’s sweeping statement,

“Chair Gensler has again proclaimed that every cryptocurrency, except BTC, is an unregistered security. He now must recuse himself from voting on any enforcement case that raises that issue since he has prejudged the outcome. Antoniu v. SEC (8th Cir. 1989).”

The contrasting views among regulators and lawmakers demonstrated the failings of US lawmakers and regulators to provide clear guidelines for crypto market platforms and, more importantly, retail investors.

Disjointed views are bearish for ETH, leaving investors in limbo until a regulatory framework is in effect.

The Day Ahead

Investors need to monitor the crypto news wires, with regulatory activity and US lawmaker chatter focal points. However, a quiet session would leave Binance, FTX, US banking news, and updates from the ongoing SEC v Ripple case to move the dial.

Further comments relating to the classification of ETH as a security could also test investor sentiment.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 2.33% to $1,466. A bullish start to the day saw ETH rally from an early low of $1,431 to a high of $1,499. ETH broke through the First Major Resistance Level (R1) at $1,457.

Technical Indicators

ETH needs to avoid a fall through R1 and the $1,414 pivot to retarget the Second Major Resistance Level (R2) at $1,483 and the morning high of $1,499. A return to $1,480 would signal a bullish session. However, Shanghai upgrade news 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 Third Major Resistance Level (R3) at $1,552.

A fall through R1 and the pivot would bring the First Major Support Level (S1) at $1,388 into play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,300. The Second Major Support Level (S2) at $1,345 should limit the downside. The Third Major Support Level (S3) sits at $1,276.

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 $1,528. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through R2 ($1,482) would give the bulls another run at the 50-day EMA ($1,528). A breakout from the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($1,528) would leave the bears in the driving seat.