ETH Needs a BTC Return to $23,500 to Support a Run at $1,700

Key Insights:

• It was a bearish start to the week for bitcoin (BTC) and ethereum (ETH), with BTC ending the day at sub-$23,000 for the first time in 11 sessions.
• A lack of Shanghai hard fork news left ETH in the hands of BTC and the broader crypto market.
• However, ETH and BTC found support from the broader market this morning.

Ethereum (ETH) slid by 4.80% on Monday. Reversing a 4.64% gain from Sunday, ETH ended the day at $1,566.

A mixed start to the day saw ETH rise to an early morning high of $1,648. Coming up short of the First Major Resistance Level (R1) at $1,682, ETH slid to a late low of $1,535. ETH fell through the First Major Support Level (S1) at $1,588 to wrap up the day at $1,566.

On Monday, bitcoin (BTC) slid by 3.86%. Reversing a 3.11% rally from Sunday, BTC ended the day at $22,830. BTC wrapped up the day at sub-$23,000 for the first time in six sessions.

A mixed start to the day saw BTC rise to an early high of $23,785 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $24,139, BTC slid to a late low of $22,500. BTC slid through the First Major Support Level (S1) at $23,177 and briefly through the Second Major Support Level at $22,607 before ending the day at $22,830.

Fed Fear and the NASDAQ Index Send the Crypto Market South

On Monday, there were no US stats for investors to consider. The lack of stats left investors to focus on tomorrow’s Fed interest rate decision and Fed Chair Powell’s press conference.

While the bets of a 25-basis point interest rate hike are bullish, a hawkish Fed Chair could weigh on the appetite for riskier assets. The US unemployment rate sits well below the Fend mandate with inflation still elevated. While cracks are showing in the US economy, the Fed Chair will be eager to ensure that inflation does not become entrenched.

There were no updates on the Shanghai hard fork to distract investors. While the hard fork is another bullish event, a delay beyond March could see ETH give up some of its 2023 gains.

For the day ahead, a lack of hard fork updates would leave BTC and ETH in the hands of the US economic calendar and the NASDAQ Index. Later today, US consumer confidence figures for January will draw interest, though the numbers are unlikely to influence the Fed Chair’s policy outlook.

However, investors should also monitor the crypto news wires for updates on FTX, Genesis, and the SEC v Ripple case.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.35% to $1,572. A mixed start to the day saw ETH fall to an early low of $1,562 before rising to a high of $1,576.

Technical Indicators

ETH needs to move through the $1,583 pivot to target the First Major Resistance Level (R1) at $1,631 and the Monday high of $1,648. A return to $1,600 would signal a breakout session. However, the crypto news wires and Shanghai hard fork updates will have to 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 $1,696 and resistance at $1,700. The Third Major Resistance Level (R3) sits at $1,809.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,518 in play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,500 and the Second Major Support Level (S2) at $1,470. The Third Major Support Level (S3) sits at $1,357.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 100-day EMA, currently at $1,555. The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering bullish signals.

A move through the 50-day EMA ($1,590) would support a breakout from R1 ($1,631) to target R2 ($1,696) and $1,700. However, a fall through the 100-day EMA ($1,555) would give the bears a run at S1 ($1,518). A move through the 50-day EMA would send a bullish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.15% to $22,864. A mixed start to the day saw BTC rise to an early high of $22,854 before falling to a low of $22,730.

Technical Indicators

BTC needs to move through the $23,038 pivot to target the First Major Resistance Level (R1) at $23,577 and the Monday high of $23,785. A return to $23,500 would signal another breakout session. However, the crypto news wires and the NASDAQ Index need to provide support.

In the event of another bullish session, the bulls would likely test the Second Major Resistance Level (R2) at $24,323. The Third Major Resistance Level sits at $25,608.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,292 in play. However, barring another broad-based crypto sell-off, BTC should avoid sub-$22,000 and the Second Major Support Level (S2) at $21,753. The Third Major Support Level (S3) sits at $20,468.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat at the 50-day EMA, currently at $22,864. The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, delivering mixed signals.

A move through the 50-day EMA ($22,864) would support a breakout from R1 ($23,577) to target R2 ($24,323). However, a fall through S1 ($22,292) would give the bears a run at the 100-day EMA ($22,007) and S2 ($21,753). A breakout from the 50-day EMA would send a bullish signal.