Bitcoin Eyes Return to $25,000 after China Stats Sent BTC and ETH South

Key Insights:

• It is a bearish start to the week for bitcoin (BTC) and Ethereum (ETH), which have joined the broader market in the red.
• This morning, economic indicators from China weighed on riskier assets, with the Chinese economy performing far worse than anticipated.
• However, despite the bearish mood, technical indicators remain bullish and support a return to the August highs.

On Sunday, bitcoin (BTC) and Ethereum (ETH) succumbed to broader crypto market forces. After hitting $25,000 for the first time since June 13, BTC hit reverse, with ETH also giving up on the $2,000 handle.

Following positive US economic indicators suggesting that the US economy may avoid a technical recession, US inflation numbers planted a seed of doubt about what to expect in September.

Strong labor market conditions, a pickup in consumer confidence, and softer inflation may have delivered the Fed a perfect set of numbers to deliver another 75-basis point rate hike. The uncertainty over what to expect tested the crypto majors ahead of today’s session.

China Economic Indicators Test Support for Riskier Assets

Earlier today, economic data from China tested investor appetite for riskier assets. Industrial production increased by 3.8% year-over-year, down from 3.9% in June. Retail sales increased by 2.7% year-over-year, down from 3.1% in June. Economists forecast industrial production of 4.6% and retail sales of 5%.

The numbers disappointed, forcing the PBoC to deliver support that briefly limited the damage. However, if the numbers from China are a global economic precursor, the stats provided a reality check. Crude oil prices hit reverse, with the NASDAQ 100 Mini spending the day in the red alongside the broader crypto market.

Ahead of the US opening bell, the NASDAQ 100 Mini was down 46.75 points. With no US economic indicators to consider today, investors will need to monitor FOMC member chatter. Any hawkish FOMC chatter and the talk of a 75-basis point hike could add to the market woes. WTI Crude was down 5.48%.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.92% to $24,091.

A choppy morning saw BTC strike an early high of $25,203 before sliding to a low of $23,890.

BTC broke through the First Major Resistance Level (R1) at $24,832 before testing the First Major Support Level (S1) at $23,978.

Technical Indicators

BTC needs to move through the $24,495 pivot to retarget the First Major Resistance Level (R1) at $24,832 and the morning high of $25,203.

However, BTC would need a shift in risk sentiment to support a breakout from $24,500. Dovish FOMC member chatter could counter the weak stats from China.

An extended crypto rally would see BTC test the Second Major Resistance Level (R2) at $25,347 and resistance at $25,500. The Third Major Resistance Level (R3) sits at $26,198.

Failure to move through the pivot would leave the First Major Support Level (S1) at $23,978 in play. Barring an extended sell-off, BTC should steer clear of the Second Major Support Level (S2) at $23,647.

The Third Major Support Level (S3) sits at $22,794.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 50-day EMA, currently at $24,010.

The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, the signals price positive.

A hold above the 50-day EMA would support a move through $24,500 to bring the resistance levels back into play.

However, a fall through the 50-day EMA and S1 ($23,978) could see BTC test S2 ($23,647) and the 100-day EMA, currently at $23,627.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 2.12% to $1,895.

A choppy morning saw ETH strike an early high of $2,013 before sliding to a low of $1,878.

ETH broke through the First Major Resistance Level (R1) at $2,003 before testing the First Major Support Level (S1) at $1,885.

Technical Indicators

ETH needs to move through the $1,958 pivot to retarget the First Major Resistance Level (R1) at $2,003 and the Sunday high of $2,030.

However, ETH would also need a shift in risk sentiment to support a breakout from $1,950. Merge updates and FOMC member chatter will need to be crypto-friendly to support a rebound.

An extended crypto rally would see ETH test the Second Major Resistance Level (R2) at $2,081 and resistance at $2,100. The Third Major Resistance Level (R3) sits at $2,204.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,885 in play. Barring an extended sell-off, ETH should steer clear of sub-$1,850 and the Second Major Support Level (S2) at $1,835.

The Third Major Support Level (S3) sits at $1,712.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Going into the afternoon session, Ethereum sat above the 50-day EMA, currently at $1,868.

The 50-day EMA flattened on the 100-day EMA, while the 100-day EMA widened from the 200-day EMA, the signals price positive.

A hold above the 50-day EMA would support a move through $1,950 to bring the resistance levels back into play.

However, a fall through the 50-day EMA and S1 ($1,885) could see ETH test S2 ($1,835) and the 100-day EMA, currently at $1,773.