BTC Bulls Need Progress on the US Debt Ceiling to Deliver $28,500

Key Insights:

• On Thursday, BTC extended its losing streak to six sessions, falling by 2.19% to end the day at $27,016.
• US economic indicators took a back seat, with investors fretting about the implications of a US default on payments.
• The technical indicators were bearish, signaling a return to sub-$26,000.

On Thursday, bitcoin (BTC) fell by 2.19%. Following a 0.17% loss on Wednesday, BTC ended the day at $27,016. Significantly, BTC extended its losing streak to six sessions and fell to sub-$27,000 for the second time since March.

A mixed start to the day saw BTC rise to an early high of $27,654 before hitting reverse. Falling short of the First Major Support level (S1) at $28,359, BTC fell to a late afternoon low of $26,795. BTC briefly fell through the First Major Support Level (S1) at $26,868 before wrapping up the day at $27,016.

US Debt Ceiling and the Risk of Default Left BTC in the Red

It was another busy session on Thursday. US wholesale inflation and labor market numbers drew interest. However, softer wholesale inflation and a larger-than-expected rise in jobless claims failed to deliver a bullish afternoon.

The US wholesale inflation rate softened from 2.7% to 2.3% in April versus a forecasted 2.4%. Core inflation eased from 3.4% to 3.2%. Jobless claim figures also supported a less hawkish Fed, with initial jobless claims up from 242k to 264k. Significantly, initial jobless claims breached 250k for the first time since April 2022.

While the stats supported a shift in sentiment toward Fed monetary policy, US debt ceiling-related chatter weighed on BTC and the broader crypto market.

US Treasury Secretary Janet Yellen had this to say about a US default,

“A default would threaten the gains that we’ve worked so hard to make over the past few years in our pandemic recovery. And it would spark a global downturn that would set us back much further.”

Fears are that failure to raise the US debt ceiling would send the US and global economies into recessions.

On Thursday, the NASDAQ Composite Index gained 0.18%, while the S&P 500 and Dow saw losses of 0.17% and 0.66%, respectively. The NASDAQ Composite Index bucked the broader market trend, with Alphabet Inc. (GOOGL) gaining 4.31% on Google AI plans.

The Day Ahead

It is another busy day ahead for the global financial markets. US consumer sentiment and expectation numbers will influence the afternoon. A more marked decline in the Michigan Consumer Sentiment Index would test buyer appetite.

While FOMC member commentary will also draw interest, the US debt ceiling will likely remain the focal point. Failure to progress toward averting a US Government default would weigh on BTC and the broader crypto market.

However, US lawmakers and regulatory activity will remain a focal point. Investors should track SEC v Ripple case updates, with a Court ruling likely to have a material impact. Binance and Coinbase (COIN)-related news will also need monitoring.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.02% at $27,024. A range-bound start to the day saw BTC fall to an early low of $26,992 before rising to a high of $27,032.

Technical Indicators

Resistance & Support Levels

BTC needs to move through the $27,155 pivot to target the First Major Resistance Level (R1) at $27,515 and the Thursday high of $27,654. A return to $27,500 would signal an extended bullish session. The crypto news wires and US debt ceiling updates 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 $28,014. The Third Major Resistance Level (R3) sits at $28,873.

Failure to move through the pivot would leave the First Major Support Level (S1) at $26,656 in play. However, barring another risk-off-fueled sell-off, BTC should avoid sub-$26,500 and the Second Major Support Level (S2) at $26,296. The Third Major Support Level (S3) sits at $25,437.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($28,035). The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA converging on the 200-day EMA, sending bearish signals.

A move through R1 ($27,515) would give the bulls a run at R2 ($28,014) and the 50-day EMA ($28,035). However, failure to move through the 50-day EMA would leave S1 ($26,656) in view.