BTC Remains at Risk of Sub-$19,500 on Contagion Fears

Key Insights:

• It was a bearish Friday session, with BTC falling by 0.88% to end the day at $20,201.
• Banking sector woes, US economic indicators, and the NASDAQ Composite sent BTC and the broader crypto market into the red.
• Technical indicators are bearish, with sub-$18,500 in view.

On Friday, bitcoin (BTC) fell by 0.88%. Following a 6.13% tumble on Thursday, BTC ended the day at $20,201. BTC visited sub-$20,000 for the first time since January 14 and extended its losing streak to five sessions.

A bearish start to the day saw BTC fall from an early high of $20,382 to a late morning low of $19,592. BTC fell through the First Major Support Level (S1) at $19,699 before a partial recovery through the afternoon session. BTC briefly revisited the $20,300 handle before easing back to end the day at $20,201.

US Banking Woes, Fed Fear, and Biden Weigh on Sentiment

Fed Fear continued to pressure BTC and the broader crypto market on Friday. US economic indicators delivered afternoon support, though the immediate gains in response to the US Jobs Report were short-lived.

US nonfarm payrolls increased by 311k in February versus a forecasted 205k rise. In January, nonfarm payrolls surged by 504k. While the headline figures were bullish, wage growth slowed, with the US unemployment rate rising from 3.4% to 3.6%.

Softer wage growth and a rise in the US unemployment rate were bearish, though unlikely to be enough to force the Fed to reconsider its more aggressive policy goals.

While the stats drew interest, US banking woes weighed on the NASDAQ Composite Index and the crypto market. Contagion fears in the financial sector weighed on riskier assets. Investors responded to the news of regulators shutting down SVB Financial Group (SIVB).

The NASDAQ Composite Index fell by 1.76% on Friday, with the Dow and S&P 500 seeing losses of 1.07% and 1.45%, respectively.

With contagion fears weighing, intensifying regulatory and lawmaker scrutiny continued to test buyer appetite. This week, the US administration resumed its battle against cryptos, removing a crypto tax subsidy as part of the 2024 budget.

The latest move follows the call on regulators to increase the scrutiny of the digital asset space and the Executive Order.

The Day Ahead

With the US markets closed for the weekend, investors should monitor the crypto news wires for events that could move the dial.

Crypto news events will continue testing sentiment, with regulatory activity and lawmaker chatter remaining the investor focal points. Binance, FTX, and US Banking sector news and updates from the ongoing SEC v Ripple case need monitoring.

Bitcoin (BTC) Price Action

This morning, BTC was up 1.49% to $20,503. A mixed start to the day saw BTC fall to an early low of $20,185 before rising to a high of $20,789. BTC briefly broke through the First Major Resistance Level (R1) at $20,525.

BTC Technical Indicators

BTC needs to avoid the $20,058 pivot to retarget the First Major Resistance Level (R1) at $20,525 and the morning high of $20,789. A return to $20,700 would signal an extended bullish session. The crypto news wires 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 $20,848 and resistance at $21,000. The Third Major Resistance Level (R3) sits at $21,638.

A fall through the pivot would bring the First Major Support Level (S1) at $19,735 into play. However, barring a crypto event-fueled crypto sell-off, BTC should avoid sub-$19,000. The Second Major Support Level (S2) at $19,268 should limit the downside.

The Third Major Support Level (S3) sits at $18,478.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 50-day EMA ($21,761). The 50-day EMA slid back from the 200-day EMA, with the 100-day EMA pulling back the 200-day EMA, delivering bearish signals.

A move through R1 ($20,525) would give the bulls another run at R2 ($20,848) to bring R3 ($21,638) and the 50-day EMA ($21,761) into view. A move through the 50-day EMA would send a bullish signal. However, failure to move through the 50-day EMA ($21,761) would leave the bears in control.