BTC to Target $28,000 on Progress Toward a US Debt Ceiling Deal

Key Insights:

• On Monday, BTC joined the broader crypto market in the red, falling by 0.52% to end the day at $27,054.
• Recessionary jitters overshadowed progress toward raising the US debt ceiling.
• The technical indicators remained bearish, signaling a return to sub-$26,000.

On Tuesday, bitcoin (BTC) fell by 0.52%. Partially reversing a 0.96% gain from Monday, BTC ended the day at $27,054. Significantly, BTC held onto the $27,000 handle despite the bearish session.

A choppy start to the day led BTC to a first-hour high of $27,313 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $27,666, BTC fell to an early morning low of $26,892. Steering clear of the First Major Support Level (S1) at $26,733, BTC revisited the $27,300 handle before briefly returning to sub-$27,000. A bullish end to the session limited the downside.

China and US Economic Indicators Fuel Recessionary Fears

It was a busy Tuesday session. Economic indicators from China set the tone, with weaker-than-expected stats weighing on riskier assets.

In China, industrial production increased by 5.6% year-over-year in April versus a forecasted 10.9%. Industrial production rose by 3.9% in March. Retail sales surged by 18.4% year-over-year versus 10.6% in March. Economists forecast a 21% increase.

While falling short of forecasts, industrial production increased at the most marked pace since September 2022, when production increased by 6.3%.

US economic indicators failed to change the mood, with retail sales numbers falling short of forecasts. Retail sales increased by 0.4% in April versus a forecasted 0.8% rise. In March, retail sales fell by 0.7%.

The crypto news wires also drew investor interest, with updates from the ongoing SEC v Ripple and SEC v Coinbase cases drawing interest.

Significantly, Judge Torres declined the SEC’s motion to seal the famous Willian Hinman speech-related documents. However, the Court ruling failed to spur a BTC breakout despite the significance to the case and the broader crypto market.

The Day Ahead

It is a quieter Wednesday session. US housing sector numbers will draw interest this afternoon. However, the numbers are unlikely to influence investor sentiment. US debt ceiling-related news will likely remain the focal point.

A deal to avert a US default would drive demand for riskier assets. However, investors should also consider Fed chatter after the disappointing retail sales figures.

Beyond the US economic calendar and debt crisis, SEC v Ripple case updates and Binance and Coinbase (COIN)-related news would also move the dial. Court rulings from the SEC v Ripple case would materially influence BTC price action.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.06% to $27,039. A range-bound start to the day saw BTC rise to an early high of $27,063 before falling to a low of $27,039.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to move through the $27,086 pivot to target the First Major Resistance Level (R1) at $27,281 and the Tuesday high of $27,313. A return to $27,200 would signal an extended bullish session. The crypto news wires and US debt ceiling-related news 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 $27,507. The Third Major Resistance Level (R3) sits at $27,928.

Failure to move through the pivot would leave the First Major Support Level (S1) at $26,860 in play. However, barring a Washington-fueled sell-off, BTC should avoid sub-$26,000. The Second Major Support Level (S2) at $26,665 should limit the downside. The Third Major Support Level (S3) sits at $26,244.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 50-day EMA ($27,324). The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA easing back from the 200-day EMA, sending bearish signals.

A move through R1 ($27,281) and the 50-day EMA ($27,324) would give the bulls a run at R2 ($27,507). However, failure to move through the 50-day EMA would leave S1 ($26,860) in view.