ETH Faces the Threat of Sub-$1,200 as Recession Fears Linger

Key Insights:

• Bitcoin (BTC) and ethereum (ETH) are on the back foot this morning as market conditions normalized after Thursday’s decoupling from the NASDAQ 100.
• Following a lighter economic calendar on Thursday, US private sector PMIs will draw interest, with weak numbers likely to test buyer appetite.
• The technical indicators remain bearish, suggesting a possible return to 2022 lows.

On Thursday, bitcoin (BTC) rallied by 5.09%. Reversing a 2.19% decline from Wednesday, BTC ended the day at $19,413. BTC fell to an early low of $18,377 before striking a late high of $19,524. Falling short of the First Major Resistance Level (R1) at $19,566, BTC ended the day at sub-$19,500.

Ethereum (ETH) rallied by 6.42% on Thursday. Reversing a 5.82% slide from Wednesday, ETH ended the day at $1,326. Tracking the broader market, ETH fell to an early low of $1,237 before rallying to a late high of $1,349. However, falling short of the First Major Resistance Level at $1,365, ETH ended the day at sub-$1,330.

Market optimism towards a favorable outcome of the SEC v Ripple (XRP) case and the Cardano (ADA) mainnet hard fork delivered crypto market support. ETH and BTC ended the day in positive territory despite the NASDAQ 100 falling by 1.37% on Thursday.

With SEC Chair Gary Gensler hot on the heels of the crypto market, the SEC may lose a stronghold should an SEC settlement with Ripple transpire. Such an outcome could hand the baton to the Commodity Futures Trading Commission (CFTC), favored by industry experts.

However, for the day ahead, the market focus is on private sector PMIs that could reignite market fear of a global recession. Weak numbers from the US would add to the bearish mood as the crypto market recouples with the NASDAQ 100.

This morning, the NASDAQ 100 Mini was down 96.5 points, with the crypto market cap down 0.75% ($6.46 billion) to $898.0 billion.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 1.37% to $19,147. A mixed morning saw BTC rise to an early high of $19,512 before falling to a low of $19,041.

Technical Indicators

BTC needs to avoid the $19,105 pivot to target the First Major Resistance Level (R1) at $19,832. While BTC decoupled from the NASDAQ 100 on Thursday, US economic indicators could influence later today. Private sector PMIs for September could reignite recession fears.

In the case of an extended rally, BTC should test the Second Major Resistance Level (R2) at $20,252. The Third Major Resistance Level (R3) sits at $21,399.

A fall through the pivot would bring the First Major Support Level (S1) at $18,685 into play. Barring another extended sell-off, BTC should avoid sub-$18,000 and the Second Major Support Level (S2) at $17,958.

The Third Major Support Level (S3) sits at $16,811.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $19,487.

The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish price signals.

A move through the 50-day EMA ($19,487) would give the bulls a run at R1 ($19,832) and the 100-day EMA ($19,862). The 200-day EMA sits at $20,424. However, failure to move through the 50-day EMA would leave BTC under pressure.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.35% to $1,322. A mixed morning saw ETH rise to an early high of $1,360 before falling to a low of $1,313.

Technical Indicators

ETH needs to avoid the $1,304 pivot to target the First Major Resistance Level (R1) at $1,371. US economic indicators would have to reflect softer inflationary pressure but ease fears of a recession to deliver a bullish session.

In the event of an extended rally, ETH could target the Second Major Resistance Level (R2) at $1,416. The Third Major Resistance Level (R3) sits at $1,528.

A fall through the pivot would bring the First Major Support Level (S1) at $1,259 into play. Barring an extended US session sell-off, ETH should avoid sub-$1,200 and the Second Major Support Level (S2) at $1,192

The Third Major Support Level (S3) sits at $1,080.

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 $1,394. 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.

An ETH breakout from R1 ($1,371) would give the bulls a run at the 50-day EMA ($1,394) and R2 ($1,416). However, market risk sentiment will need to improve materially to support a return to $1,400. Failure to move through the 50-day EMA would leave ETH under pressure near-term.