BTC Faces the Risk of Sub-$23,000 on Banking Sector Jitters

Key Insights:

• It was a bearish Wednesday session, with BTC falling by 1.67% to end the day at $24,321.
• US economic indicators failed to deliver support, with fears of a banking crisis hitting riskier assets.
• Technical indicators remain bullish, with $26,000 in view.

On Wednesday, bitcoin (BTC) fell by 1.67%. Partially reversing a 2.28% gain from Tuesday, BTC ended the day at $24,321. Significantly, a four-day winning streak ended.

After a choppy morning, BTC rose to a mid-day high of $25,324 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $26,156, BTC slid to a late afternoon low of $23,931. However, steering clear of the First Major Support Level (S1) at $23,687, BTC found late support to wrap up the day at $24,321.

Risk Aversion Sent Bank Stocks and BTC into the Red

The global financial markets took a hit on Wednesday as investor attention returned to the banking sector.

Investor focus shifted from US regional banks to Credit Suisse. The Saudi National Bank, Credit Suisse’s largest shareholder, stated it would not provide further financial assistance, sending the share price to a new all-time low. On Wednesday, Credit Suisse tumbled by 24.24% to end the day at CHF1.70.

The news sent the European and US equity markets into the deep red, weighing on BTC and the broader crypto market.

However, the Swiss National Bank delivered market relief on Wednesday night, announcing it would provide additional liquidity if required. The Swiss central bank also highlighted that Credit Suisse meets all capital and liquidity requirements.

The comments and bets of a less aggressive Fed interest rate hike provided late support to reduce the losses.

US economic indicators also eased bets of a less aggressive Fed. US wholesale inflation and retail sales figures failed to impress. The producer price index fell by 0.1% in February versus a forecasted 0.3% increase. Retail sales figures were more disappointing, falling by 0.4% in February versus a forecasted 0.3% decline. Retail sales jumped by 3.2% in January.

The numbers were good enough to cement a 25-basis point Fed rate hike in March and raise the prospects of a pause in rate hikes. We also expect the Fed to consider the impact of interest rate hikes on the banking sector, with Silicon Valley Bank (SIVB) and Signature Bank (SBNY) victims of the Fed’s commitment to bring inflation to target.

On Wednesday, the NASDAQ Composite Index rose by 0.05%, while the Dow and S&P 500 saw losses of 0.87% and 0.70%, respectively. This morning, the NASDAQ mini was up 19.25 points.

The Day Ahead

Economic indicators from the US and banking sector-related news will remain the focal points. US initial jobless claims and Philly Fed Manufacturing PMI numbers will draw interest this afternoon. Weak numbers could raise fears of a hard landing as cracks in the US economy emerge.

Banking sector news will also influence as governments and regulators attempt to calm market fears of another banking crisis.

However, the markets should continue to monitor Binance and FTX news and updates from the ongoing SEC v Ripple case.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.16% to $24,282. A mixed start to the day saw BTC rise to an early high of $24,376 before falling to a low of $24,246.

Technical Indicators

BTC needs to move through the $24,525 pivot to target the First Major Resistance Level (R1) at $25,120 and the Wednesday high of $25,324. A return to $25,000 would signal an extended bullish session. The crypto news wires and economic data 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 $25,918. The Third Major Resistance Level (R3) sits at $27,311.

Failure to move through the pivot would leave the First Major Support Level (S1) at $23,727 in play. However, barring a crypto event-fueled crypto sell-off, BTC should avoid sub-$23,000. The Second Major Support Level (S2) at $23,132 should limit the downside.

The Third Major Support Level (S3) sits at $21,739.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($22,960). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA moving away from the 200-day EMA, sending bullish signals.

A hold above the 50-day EMA ($22,960) would support a breakout from R1 ($25,120) to target R2 ($25,918) and $26,000. However, a fall through S1 ($23,727) would bring S2 ($23,132) and the 50-day EMA ($22,960) into view. A fall through the 50-day EMA ($22,960) would send a bearish signal.