Bitcoin and $23,000 in the Hands Fed Chair Powell and US Lawmakers

Key Insights:

• It was a bearish Monday session, with BTC falling by 0.12% to end the day at $22,405.
• Investor caution left BTC and the broader crypto market flat ahead of Fed Chair Powell’s testimony, with crypto market scrutiny testing buyer appetite.
• Technical indicators are bearish, with sub-$21,500 in view.

On Monday, bitcoin (BTC) slipped by 0.12%. Following a 0.38% gain on Sunday, BTC ended the day at $22,405. While BTC avoided sub-$22,000 levels, BTC also fell short of the $23,000 handle for the third consecutive session.

A choppy start to the day saw BTC fall to an early low of $22,278 before making a move. Steering clear of the First Major Support Level (S1) at $22,201, BTC rose to a mid-afternoon high of $22,591. However, falling short of the First Major Resistance Level (R1) at $22,661, BTC fell back to sub-$22,400 levels before ending the session at $22,405.

Regulatory Scrutiny and Fed Chair Powell Jitters Weighed on Sentiment

It was a quiet day on the US economic calendar. Better-than-expected US factory orders failed to move the dial as investors responded to growth targets from China.

On Monday, Beijing set the China growth target for 2023 at 5.0%. The markets expected a target of 5.5%, raising question marks over the likely pace of a post-COVID economic recovery.

US economic data was also lackluster, with factory orders falling by 1.6% versus a forecasted 1.8% decline. In December, factory orders rose by 1.7%. The stats and a lack of Fed chatter left the NASDAQ Composite Index down 0.11% on Monday. Investor caution ahead of Fed Chair Powell’s testimony left the riskier assets flatfooted.

However, the crypto news wires added to the bearish mood. White House awareness of the Silvergate Bank saga will be of concern. In February, the White House called for greater crypto market oversight. Following the reaction to the collapse of FTX, a punitive response from the administration would be a bearish outcome for BTC and the broader crypto market.

The Day Ahead

There are no US economic indicators, leaving Fed Chair Powell to influence the afternoon session. With investors expecting the Fed Chair to receive a grilling from lawmakers on Capitol Hill, dovish policy chatter should deliver BTC price support.

However. the crypto news wires will continue to influence, with regulatory activity and lawmaker chatter the market focal points. Binance, FTX, and Silvergate Bank updates and news from the ongoing SEC v Ripple case need monitoring.

On Capitol Hill, Bitcoin mining will face scrutiny later today. Lawmakers will hold the first-ever Senate hearing focused on the urgent need to crack down on the growing environmental impacts of crypto mining. Commentary from the hearing will influence. BTC will likely show heightened sensitivity to calls for a ban.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.04% to $22,397. A mixed start to the day saw BTC rise to an early high of $22,414 before falling into the red.

Technical Indicators

BTC needs to move through the $22,425 pivot to target the First Major Resistance Level (R1) at $22,571 and the Monday high of $22,591. A return to $22,500 would signal a bullish session. The crypto news wires and Fed Powell 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 $22,738 and resistance at $23,000. The Third Major Resistance Level (R3) sits at $23,051.

Failure to move through the pivot would leave the First Major Support Level (S1) at $22,258 in play. However, barring another Fed-fueled crypto sell-off, BTC should avoid sub-$22,000. The Second Major Support Level (S2) at $22,112 should limit the downside.

The Third Major Support Level (S3) sits at $21,799.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA ($22,813). The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through R1 ($22,571) would give the bulls a run at R2 ($22,738) and the 50-day EMA ($22,813). A move through the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($22,813) would leave the Major Support Levels in play.