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ETH Bears to Target Sub-$1,550 on Fed Fear and Regulatory Risk

By:
Bob Mason
Updated: Feb 25, 2023, 04:39 UTC

After a bearish Friday, ETH and BTC were in the red this morning. Regulatory risk and Fed Fear continue to overshadow Shanghai hard fork updates.

ETH and BTC - technical analysis - FX Empire

In this article:

Key Insights:

  • It was a bearish Friday session for bitcoin (BTC) and ethereum (ETH), with ETH revisiting sub-$1,600.
  • US economic indicators and hawkish Fed chatter overshadowed sentiment toward the Shanghai hard fork.
  • ETH and BTC struggled this morning, with Fed Fear and regulatory uncertainty weighing on investor appetite.

Ethereum (ETH) fell by 2.60% on Friday. Reversing a 0.49% gain from Thursday, ETH ended the day at $1,608. The bearish session led ETH to sub-$1,600 for the second time in nine sessions.

A bullish start to the day saw ETH rise to an early high of $1,665 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $1,677, ETH slid to a late afternoon low of $1,575. ETH fell through the First Major Support Level (S1) at $1,627 and briefly through the Second Major Support Level (S2) at $1,603 before ending the day at $1,608.

On Friday, bitcoin (BTC) slid by 3.13%. Following a 1.00% loss on Thursday, BTC ended the day at $23,200. The bearish session sent BTC to sub-$23,000 for the first time in nine sessions. BTC extended its losing streak to four sessions.

A bullish start to the day saw BTC rise to an early morning high of $24,150. Coming up short of the First Major Resistance Level (R1) at $24,493, BTC slid to a late low of $22,873. BTC fell through the First Major Support Level (S1) at $23,515 and briefly through the Second Major Support Level (S2) at $23,079 before ending the day at $23,200.

US Economic Indicators and Fed Chatter Send Riskier Assets South

It was another busy session on Friday, with US economic indicators and Fed chatter influencing the afternoon sessions.

US inflation numbers caught investors off-guard, supporting hawkish Fed chatter to send the NASDAQ Composite Index and the broader crypto market into the red.

The Core PCE Price Index increased by 4.7% year-over-year in January versus an upwardly revised 4.6% in December. Economists forecast a 4.3% increase. In early February, Fed Chair Powell talked about early signs of disinflation. Friday’s numbers showed that the Fed has a long way to go before taming inflation.

Increases in spending and personal income added to the bearish mood, with wage growth another Fed focal point. Rising wages support increased consumption that would push prices higher.

Fed hawk Loretta Mester rounded off the US session, saying,

“It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%.”

The NASDAQ Composite Index responded to the stats and Loretta Mester, falling by 1.69%. Investors have to consider how long interest rates will remain elevated and how high the Fed will be willing to go.

Significantly, the US economic calendar overshadowed progress toward the Shanghai hard fork that has delivered ETH price support. The Shapella network upgrade will allow validators to withdraw their stake from the Beacon Chain back to the execution layer as well as additional functionality.

The Day Ahead

Investors should continue to monitor Shanghai hard fork news. Reports of a delay to the end of February upgrade would be bearish.

However, a lack of news would leave US regulatory activity and US lawmaker chatter in focus. Investors should also track the crypto news wires for Binance, FTX, and SEC v Ripple news updates that could move the dial.

Following the US stats on Friday, it could be a choppy session as investors grapple with Fed Fear and rising regulatory risk.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.52% to $1,599. A bearish start to the day saw ETH fall from an early high of $1,609 to a low of $1,595.

ETH sees red.
ETHUSD 250223 Daily Chart

Technical Indicators

ETH needs to move through the $1,616 pivot to target the First Major Resistance Level (R1) at $1,657 and the Friday high of $1,665. A return to $1,650 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 $1,706. The Third Major Resistance Level (R3) sits at $1,796.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,567 in play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,500. The Second Major Support Level (S2) at $1,526 should limit the damage. The Third Major Support Level (S3) sits at $1,436.

ETH support levels in play below the pivot.
ETHUSD 250223 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat at the 200-day EMA, currently at $1,597. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day ($1,635) and 50-day ($1,647) EMAs would support a breakout from R1 ($1,657) to target R2 ($1,706). However, a fall through the 200-day EMA ($1,597) would give the bears a run at S1 ($1,567). A breakout from the 50-day EMA would send a bullish signal.

EMAs are bearish.
ETHUSD 250223 4 Hourly Chart

Bitcoin (BTC) Price Action

This morning, BTC was down 0.43% to $23,101. A mixed start to the day saw BTC rise to an early high of $23,223 before falling to a low of $23,056.

BTC sees red.
BTCUSD 250223 Daily Chart

Technical Indicators

BTC needs to move through the $23,408 pivot to target the First Major Resistance Level (R1) at $23,942 and the Friday high of $24,150. A return to $24,000 would signal a breakout 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 $24,685 and resistance at $25,500. The Third Major Resistance Level (R3) sits at $25,962.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,665 in play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,131 should limit the downside.

The Third Major Support Level (S3) sits at $20,854.

BTC support levels in play below the pivot.
BTCUSD 250223 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 100-day EMA ($23,606). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day EMA ($23,606) would support a breakout from the 50-day EMA ($23,917) and R1 ($23,942) to target R2 ($24,685) and $25,000. However, a fall through the 200-day EMA ($22,840) and S1 ($22,665) would give the bears a run at S2 ($22,131). A move through the 50-day EMA ($23,917) would send a bullish signal.

EMAs are bearish.
BTCUSD 250223 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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