BTC Faces Downside Risks and a Return to Sub-$25,000 on SEC Moves

Key Insights:

• On Wednesday, BTC hit reverse, falling by 3.21% to end the day at $26,360.
• Dip buyers returned to the sidelines, with SEC activity, Binance news, and the NASDAQ Composite Index weighing.
• The technical indicators turned bearish, signaling a return to sub-$26,000.

On Wednesday, bitcoin (BTC) fell by 3.21%. Partially reversing a 5.84% rally from Tuesday, BTC ended the day at $26,360. Significantly, BTC fell short of the $27,500 handle for the seventh consecutive session.

A mixed start to the day saw BTC rise to a first-hour high of $27,393. Falling short of the First Major Resistance Level (R1) at $27,955, BTC fell to a late-session low of $26,157. However, steering clear of the First Major Support Level (S1) at $25,921, BTC found late support to wrap up the day at $26,360.

Risk Aversion and the SEC Hits BTC and the Broader Crypto Market

It was a busy Wednesday session, with economic indicators from China and the US testing buyer appetite.

China’s USD trade surplus narrowed from $90.21 billion to $65.81 billion in May versus a forecasted $71.60 billion. Significantly, exports tumbled by 7.5% year-over-year, with imports down by 4.5%. Economists forecast exports to rise by 8.0% and imports to fall by 8.0%.

US economic indicators also failed to provide support. The US trade deficit widened from $60.60 billion to $74.60 billion in April versus a forecasted $75.20 billion deficit. While imports increased, exports declined in April, leading the US trade deficit to a six-month high.

There was no reaction from the Fed, with the FOMC in the pre-FOMC meeting blackout period.

The NASDAQ Composite Index ended the day with a 1.29% loss, adding to the bearish mood. This morning, the NASDAQ mini was flat.

News of Binance US delisting trading pairs and pausing OTC trading in response to the SEC filing to freeze Binance US assets contributed to the pullback.

The Day Ahead

It is a quiet Thursday session. US initial jobless claims will draw interest this afternoon. The light economic calendar will continue to leave BTC and the broader crypto market in the hands of the crypto news wires.

US lawmaker chatter, SEC activity, and updates from the SEC v Ripple-, SEC v Binance, and SEC v Coinbase (COIN) cases and respective platforms will move the dial.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.11% to $26,389. A range-bound start to the day saw BTC rise to an early high of $26,397 before falling to a low of $26,333.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to move through the $26,637 pivot to target the First Major Resistance Level (R1) at $27,116 and the Wednesday high of $27,393. A return to $27,000 would signal an extended bullish session. The crypto news wires and 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 $27,873 and resistance at $28,000. The Third Major Resistance Level (R3) sits at $29,109.

Failure to move through the pivot would leave the First Major Support Level (S1) at $25,880 in play. However, barring an event-fueled sell-off, BTC should avoid sub-$25,500 and the Second Major Support Level (S2) at $25,401. The Third Major Support Level (S3) sits at $24,165.

Looking at the EMAs and the 4-hourly candlestick chart (below), the EMAs sent bearish signals. BTC sat below the 50-day EMA ($26,773). The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, sending bearish signals.

A move through the 50-day EMA ($26,773) would support a breakout from the 100-day EMA ($26,943) and R1 ($27,116) to give the bulls a run at the 200-day EMA ($27,204) and R2 ($27,873). However, failure to move through the 50-day EMA ($26,773) would leave S1 ($25,880) in view. A move through the 50-day EMA would send a bullish signal.