BTC at Risk of Sub-$27,000 on SEC Regulatory Enforcement Ramp Up

Key Insights:

• It was a bearish Thursday session, with BTC falling by 1.14% to end the day at $28,021.
• Investor sentiment toward the SEC soured, with profit-taking giving BTC a short-lived return to $29,000.
• However, the technical indicators remain bullish, with $30,000 in view.

On Thursday, bitcoin (BTC) fell by 1.14%. Partially reversing a 3.96% rally from Wednesday, BTC ended the day at $28,021. Despite the bearish session, BTC avoided sub-$27,000 for the second consecutive session.

A bullish start to the day saw BTC rally to an early morning high of $29,171. BTC broke through the First Major Resistance Level (R1) at $28,911 before hitting reverse. The reversal saw BTC slide to a late afternoon low of $27,677. However, steering clear of the First Major Support Level (S1) at $27,515, BTC found late support to wrap up the day at $28,021.

Gensler and $2.4 Billion in Funding Spooked Investors

Investor sentiment turned bearish on Thursday morning. The talk of SEC Chair Gary Gensler targeting $2.4 billion in funding to hire more staff and ramp up regulation by enforcement weighed on BTC and the broader crypto market.

An anti-crypto US administration approval of $2.4 billion in SEC funding would empower the SEC to crack down on the digital asset space in the US.

Market reaction to the news led to BTC decoupling from the NASDAQ Composite Index, which rose by 0.73% on Thursday. This morning, the NASDAQ mini was up 35.5 points.

The Day Ahead

Following the latest SEC funding request, investors should continue to monitor US lawmaker chatter and regulatory activity. A ramp-up in regulation by enforcement would test buyer appetite.

However, updates from the ongoing SEC v Ripple case and Binance and Coinbase (COIN)-related news will also need tracking. We expect updates from the SEC v Ripple case to have more influence. A Ripple victory would blow the wind out of the SEC’s sails.

This afternoon, US economic indicators will also provide direction. US personal spending/income and Core PCE Price Index figures will be in focus. An unexpected pickup in inflationary pressure would test support.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.05% to $28,035. A range-bound start to the day saw BTC rise to an early high of $28,049 before easing back.

Technical Indicators

BTC needs to move through the $28,290 pivot to target the First Major Resistance Level (R1) at $28,902 and the Thursday high of $29,171. A return to $28,500 would signal an extended bullish session. The crypto news wires and US stats 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 $29,784 and resistance at $30,000. The Third Major Resistance Level (R3) sits at $31,278.

Failure to move through the pivot would leave the First Major Support Level (S1) at $27,408 in play. However, barring a crypto event-fueled sell-off, BTC should avoid sub-$27,000 and the Second Major Support Level (S2) at $26,796. The Third Major Support Level (S3) sits at $25,302.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($27,680). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, sending bullish signals.

A hold above the 50-day EMA ($27,680) would support a breakout from R1 ($28,902) to target R2 ($29,784) and $30,000. However, a fall through the 50-day EMA ($27,680) and S1 ($27,408) would bring the 100-day EMA ($26,875) and S2 ($26,796) into view. A fall through the 50-day EMA would send a bearish signal.