BTC Bulls to Target $28,500 on Easing US Debt Ceiling Jitters

Key Insights:

• On Monday, BTC enjoyed a second bullish session, rising by 0.96% to end the day at $27,196.
• Hopes of a resolution to the US debt ceiling crisis and easing bets of a hawkish Fed policy move provided support.
• However, the technical indicators remained bearish, signaling a return to sub-$26,000.

On Monday, bitcoin (BTC) rose by 0.96%. Following a 0.55% gain on Sunday, BTC ended the day at $27,196. Significantly, BTC saw a two-day winning streak for the first time since May 3.

A bearish start to the day led BTC to a first-hour low of $26,741. Steering clear of the First Major Support Level (S1) at $26,625, BTC rose to a late afternoon high of $27,674. BTC broke through the First Major Resistance level (R1) at $27,227 and the Second Major Resistance Level (R2) at $27,517 before easing back to end the day at $27,196.

US Economic Indicators and Debt Ceiling Chatter Deliver Mixed Sentiment

It was a busier Monday session. US economic indicators influenced the afternoon, with US debt ceiling-related chatter in focus.

US manufacturing data eased bets of a hawkish June monetary policy decision. The NY Empire State Manufacturing Index tumbled from +10.8 to -31.8. Economists forecast a more modest decline to -3.75.

The weak numbers continued to fuel bets on the Fed hitting the pause button in June, despite elevated inflation and tight labor market conditions. However, the chances of a rate cut in 2023 are diminishing, with sticky inflation forcing FOMC members to favor higher for longer.

There were no crypto events to move the dial, with a lack of regulatory activity and lawmaker scrutiny supporting a BTC return to $27,000.

The Day Ahead

It is a busy Tuesday, with US retail sales and industrial production in focus. The retail sales numbers should have more impact as investors look for signals that could influence the Fed.

However, Fed chatter and US debt ceiling-related news will also need consideration. Failed talks between US President Biden and House Speaker Kevin McCarthy would spook investors.

Ahead of the US session, economic indicators from China will set the tone. Fixed asset investment, industrial production, retail sales, and unemployment numbers for April will provide direction. We expect the industrial production and retail sales figures to have more impact.

Recent economic indicators from China have signaled a waning economic recovery. Another round of weak numbers would fuel recessionary fears and weigh on riskier assets.

While sentiment toward the Chinese and US economies, the Fed, and the risk of a US government default will be the key, crypto-related chatter on Capitol Hill and regulatory activity will remain focal points.

However, SEC v Ripple case updates and Binance and Coinbase (COIN)-related news will also need monitoring. Court rulings from the SEC v Ripple case would materially influence BTC price action.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.14% to $27,234. A mixed start to the day saw BTC fall to an early low of $27,175 before rising to a high of $27.234.

Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $27,204 pivot to target the First Major Resistance Level (R1) at $27,666 and the Monday high of $27,674. A return to $27,500 would signal an extended bullish session. The crypto news wires and the US economic calendar 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 $28,137 and resistance at $28,500. The Third Major Resistance Level (R3) sits at $29,070.

A fall through the pivot would bring the First Major Support Level (S1) at $26,733 into play. However, barring a crypto event-fueled sell-off, BTC should avoid sub-$26,000. The Second Major Support Level (S2) at $26,271 should limit the downside. The Third Major Support Level (S3) sits at $25,338.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($27,394). The 50-day EMA eased back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, sending bearish signals.

A move through the 50-day EMA ($27,394) would support a breakout from R1 ($27,666) to give the bulls a run at the 100-day ($27,807) and 200-day ($28,007) EMAs and R2 ($28,137). However, failure to move through the 50-day EMA would leave S1 ($26,733) in view.