BTC Bears to Target $28,500 on Recession and Fed Fear

Key Insights:

• On Friday, BTC ended a three-day winning streak, falling by 0.48% to end the day at $29,338.
• US economic indicators and a gloomy outlook from Amazon.com left BTC in negative territory.
• However, the technical indicators are bullish, signaling a breakout from $30,000.

On Friday, bitcoin (BTC) slipped by 0.48%. Partially reversing a 3.70% gain from Thursday, BTC ended the day at $29,338. Despite the bearish session, BTC held onto the $29,000 handle for the second time since April 18.

A bullish start to the day saw BTC rise to an early morning high of $29,589. However, falling short of the First Major Resistance Level (R1) at $30,113, BTC fell to an early afternoon low of $28,911. Steering clear of the First Major Support Level (S1) at $28,620, BTC revisited the $29,470 handle before ending the day at $29,338.

US Economic Indicators and Amazon.com Leave BTC in the Red

It was another busy session on Friday, with US economic indicators and corporate earnings in focus.

US inflation and personal spending figures weighed on riskier assets. The Core PCE Price Index increased by 4.6% in March year-over-year versus 4.7% in February. Economists forecast inflation to soften to 4.5%. While inflation remained sticky, personal spending stalled in March, refueling recessionary fears.

Amazon.com (AMZN) added to the bearish sentiment, warning that its cloud business growth could slow further in response to businesses tightening their purse strings. Amazon.com fell by 3.98% on Friday.

However, the US banking sector woes delivered late support, with news hitting the wires of First Republic Bank (FRC) heading for receivership. FRC tumble 43.3% in regular trading hours and 33.62% in after-hours trading in response to the news.

There were no crypto events to move the dial, leaving recessionary jitters and Fed Fear to influence.

The latest inflation numbers leave the Fed on track to deliver a 25-basis point interest rate hike on Wednesday, with the markets betting on possibly more in June.

According to the CME FedWatch Tool, there is an 80.2% chance of a 25-basis point interest rate hike next week, down from 83.9% over 24 hours. However, the probability of a 25-basis point interest rate hike in June slipped from 26.8% to 19.5%.

The Day Ahead

It is a quiet Friday session, with no US economic indicators to influence investor sentiment.

The lack of external market forces will leave the crypto news wires in focus. The US banking sector, SEC v Ripple case-related chatter, and Binance and Coinbase (COIN)-related news will move the dial. Regulatory activity and US lawmaker chatter will also draw interest.

Bitcoin (BTC) Price Action

This morning, BTC was flat at $29,339.

Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $29,279 pivot to target the First Major Resistance Level (R1) at $29,648. A move through the Friday high of $29,589 would signal an extended bullish session. The crypto news wires 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 $29,957 and resistance at $30,000. The Third Major Resistance Level (R3) sits at $30,635.

A fall through the pivot would bring the First Major Support Level (S1) at $28,970 into play. However, barring a data-fueled sell-off, BTC should avoid sub-$28,500. The Second Major Support Level (S2) at $28,601 should limit the downside. The Third Major Support Level (S3) sits at $27,923.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bullish signals. BTC sat above the 50-day EMA ($28,672). The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, sending bullish signals.

A hold above S1 ($28,970) and the 50-day EMA ($28,672) would support a breakout from R1 ($29,648) to target R2 ($29,957) and $30,000. However, a fall through S1 ($28,970) would bring the 50-day ($28,672) and 100-day ($28,666) EMAs and S2 ($28,601) into view. A fall through the 50-day EMA would send a bearish signal.