ETH Eyes Sub-$1,500 as the SEC Turns Up the Heat on Exchanges

Key Insights:

• It was a bearish Thursday session for bitcoin (BTC) and ethereum (ETH), with BTC returning to sub-$22,000.
• News of Kraken ceasing US crypto staking services following SEC charges of illegally selling unregistered securities sank the crypto market.
• This morning, ETH and BTC found modest support but face downside risks.

Ethereum (ETH) slid by 6.36% on Thursday. Following a 1.20% fall on Wednesday, ETH ended the day at $1,546.

A bullish start to the day saw ETH rally to an early low of $1,656. Coming up short of the First Major Resistance Level (R1) at $1,691, ETH slid to a late low of $1,524. ETH fell through the First Major Support Level (S1) at $1,621 and the Second Major Support Level (S2) at $1,590 to end the day at $1,546.

On Thursday, bitcoin (BTC) slid by 5.04%. Following a 1.24% loss on Wednesday, BTC ended the day at $21,800. BTC wrapped up the day at sub-$22,000 for the first time since January 19.

A bullish start to the day saw BTC rise to an early high of $23,003. Coming up short of the First Major Resistance Level (R1) at $23,361, BTC tumbled to a late low of $21,700. BTC fell through the First Major Support Level (S1) at $22,622 and the Second Major Support Level (S2) at $22,287 to end the day at $21,800.

SEC Regulation by Enforcement Sends BTC and ETH South

On Thursday, US economic indicators and the NASDAQ Composite Index had a less influential session on the crypto market. A pickup in US initial jobless claims failed to ease the fear of a more hawkish Fed interest rate trajectory to curb wage growth and bring inflation to target.

The NASDAQ Index fell by 1.02% on Thursday, with the NASDAQ mini down 11.75 points this morning.

Regulatory activity in the US sent the crypto market south, with news of Kraken settling with the SEC and ceasing US crypto staking services weighing on investor sentiment.

Following the collapse of FTX, the White House Administration’s call for greater regulatory oversight raised the threat of such SEC action. With the SEC regulating by enforcement, the US crypto market remains exposed to significant regulatory risk that could materially impact innovation and price action.

Today, investors should continue monitoring SEC chatter. News of the SEC investigating more crypto exchanges would test investor sentiment. Updates on FTX, Genesis, and Silvergate Bank also need consideration.

On the US economic calendar, Michigan Consumer Sentiment numbers and Fed chatter will also provide direction though the degree of influence will be SEC-dependent. A pickup in consumer inflation expectations and hawkish Fed chatter would be a bearish combination.

Zhejiang testing and Shanghai hard fork news will need tracking. Radio silence would leave ETH in the hands of the broader crypto market.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.45% to $1,553. A mixed morning saw ETH fall to an early low of $1,530 before rising to a high of $1,555.

Technical Indicators

ETH needs to move through the $1,575 pivot to target the First Major Resistance Level (R1) at $1,627 and the Thursday high of $1,656. A return to $1,600 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 $1,707. The Third Major Resistance Level (R3) sits at $1,839.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,495 in play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,450 and the Second Major Support Level (S2) at $1,443. The Third Major Support Level (S3) sits at $1,311.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 100-day EMA, currently at $1,610. 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 ($1,610) would give the bulls a run at the 50-day EMA ($1,627) and R1 ($1,627). However, a fall through the 200-day EMA ($1,548) would give the bears a run at S1 ($1,495). A move through the 50-day EMA would send a bullish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.42% to $21,892. A mixed morning saw BTC rise to an early high of $21,937 before falling to a low of $21,640.

Technical Indicators

BTC needs to move through the $22,167 pivot to target the First Major Resistance Level (R1) at $22,635 and the Thursday high of $23,003. A return to $22,000 would signal a breakout session. However, the crypto news wires and US stats will 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 $24,471. The Third Major Resistance Level sits at $24,774.

Failure to move through the pivot would leave the First Major Support Level (S1) at $21,332 in play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$21,000 and the Second Major Support Level (S2) at $20,865. The Third Major Support Level (S3) sits at $19,562.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat above the 200-day EMA ($21,703). 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 R1 ($22,635) would support a breakout from the 100-day ($22,693) and 50-day ($22,868) EMAs to bring R2 ($24,471) into play. However, a fall through the 200-day EMA ($21,703) would bring S1 ($21,332) into view. A move through the 50-day EMA would send a bullish signal.