Bitcoin Bears to Target Sub-$21,500 on US Labor Market Stats and Powell

Key Insights:

• It was a bearish Tuesday session, with BTC falling by 0.87% to end the day at $22,209.
• Fed Fear returned on Tuesday, with Fed Chair Powell raising the prospects of a 50-basis point rate hike in March.
• Technical indicators are bearish, with sub-$21,500 in view.

On Tuesday, bitcoin (BTC) fell by 0.87%. Following a 0.12% loss on Monday, BTC ended the day at $22,209. While falling short of the $23,000 handle for the fourth consecutive session, BTC revisited sub-$22,000 levels for the second time since February 14.

A mixed start to the day saw BTC rise to an early high of $22,554. Coming into the range of the First Major Resistance Level (R1) at $22,571, BTC slid to a mid-afternoon low of $21,950. BTC fell through the First Major Support Level (S1) at $22,258 and the Second Major Support Level (S2) at $22,112 before a partial recovery to end the day at $22,209.

Fed Chair Powell Sends BTC and the NASDAQ Composite Index into the Red

It was a quiet day on the US economic calendar. There were no US economic indicators for investors to consider, leaving Fed Chair Powell to influence the afternoon session.

Unexpectedly hawkish testimony caught investors by surprise. Powell sent BTC to sub-$22,000 and the NASDAQ Composite Index into negative territory.

On Tuesday, Fed Chair Powell spoke of the need for higher rates to combat inflation, noting that economic data was better than expected. In response, the NASDAQ Composite Index fell by 1.25%, with the S&P 500 sliding by 1.53%. The NASDAQ mini was down 15.75 points this morning.

While Fed Chair Powell weighed on investor sentiment, regulatory activity and US lawmaker chatter continued to pressure BTC and the broader crypto market.

However, Court decisions against SEC motions cushioned the downside for BTC and the broader crypto market. On Tuesday, the US Courts approved the Binance.US acquisition of Voyager Digital for $1.3 billion.

On Tuesday, a Senate Environment and Public Works Subcommittee hearing on crypto-asset mining and the environment had little price impact on Proof-of-Work cryptos.

The Day Ahead

US economic indicators and Fed Chair Powell will influence the afternoon session. US ADP nonfarm employment change and JOLTs Job Openings will draw interest. Following the hawkish Fed Chair Powell testimony on Tuesday, hotter-than-expected numbers would fuel bets of a 50-basis point Fed interest rate hike in March, which would be BTC negative.

Fed Chair Powell will also deliver a second day of testimony. Powell may reference the labor market numbers in the Q&A session.

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.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.18% to $22,250. A bullish start to the day saw BTC rise from an early low of $22,203 to a high of $22,291.

Technical Indicators

BTC needs to avoid the $22,238 pivot to target the First Major Resistance Level (R1) at $22,525 and the Tuesday high of $22,554. A return to $22,500 would signal a bullish session. The crypto news wires and US economic indicators 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 $22,842 and resistance at $23,000. The Third Major Resistance Level (R3) sits at $23,446.

A fall through the pivot would bring the First Major Support Level (S1) at $21,921 into play. However, barring a US data-fueled crypto sell-off, BTC should avoid sub-$21,500. The Second Major Support Level (S2) at $21,634 should limit the downside.

The Third Major Support Level (S3) sits at $21,030.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA ($22,701). 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 ($22,525) would give the bulls a run at the 50-day EMA ($22,701) and R2 ($22,842). A move through the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($22,701) would leave the Major Support Levels in play.