BTC Turns Bullish But Sub-$26,000 Risk Remains on Recessionary Fear

Key Insights:

• On Wednesday, BTC gained 1.37% to end the session at $27,425.
• Progress toward a US debt ceiling deal and SEC v Ripple case rulings supported the bullish session.
• However, the technical indicators remained bearish, signaling a return to sub-$26,000.

On Wednesday, bitcoin (BTC) rose by 1.37%. Reversing a 0.52% loss from Tuesday, BTC ended the day at $27,425. Despite the bullish session, BTC fell short of the $28,000 handle for a seventh consecutive session.

A bearish morning saw BTC fall to a late-morning low of $26,612. BTC fell through the First Major Support Level (S1) at $26,860 before rising to a late-session high of $27,532. BTC broke through the First Major Resistance Level (R1) at $27,281 and briefly through the Second Major Resistance Level (R2) at $27,507 before ending the day at $27,425.

Easing Fears of a US Default Offset Increasing Recessionary Jitters

It was a relatively quiet Wednesday session. US economic indicators had a limited impact on BTC and the broader crypto market, with housing sector data in focus.

The light economic calendar left US debt ceiling-related news to influence the afternoon. Progress toward a debt ceiling deal eased concerns of a US payment default, driving demand for riskier assets.

On Wednesday, the NASDAQ Composite Index rose by 1.28%, with the S&P 500 and the Dow seeing gains of 1.19% and 1.24%, respectively. The NASDAQ mini was down 2.75 points this morning.

The crypto news wires also provided direction, with updates from the ongoing SEC v Ripple.

Significantly, Judge Torres declined the SEC’s motion to seal the famous Willian Hinman speech-related documents. A Ripple victory could end the SEC’s regulation by enforcement mantra.

The Day Ahead

It is a busier Thursday session. US initial jobless claims and the Philly Fed Manufacturing Index will influence the afternoon. An unexpected increase in jobless claims and a slide in the Manufacturing Index would fuel recessionary fears and test the appetite for riskier assets.

However, a deal to avert a US default would drive demand for riskier assets.

Beyond the US economic calendar and the debt crisis, investors should continue to monitor SEC v Ripple case updates and Binance and Coinbase (COIN)-related news. After the Hinman ruling, investors will likely expect a flurry of activity and finality in the SEC v Ripple case.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.02% to $27,420. A range-bound start to the day saw BTC rise to an early high of $27,442 before falling to a low of $27,414.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to avoid the $26,847 pivot to target the First Major Resistance Level (R1) at $27,767. A move through the Wednesday high of $27,532 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 $28,110 and resistance at $28,500. The Third Major Resistance Level (R3) sits at $29,030.

A fall through the pivot would bring the First Major Support Level (S1) at $26,847 into play. However, barring a Washington-fueled sell-off, BTC should avoid sub-$26,000. The Second Major Support Level (S2) at $26,270 should limit the downside. The Third Major Support Level (S3) sits at $25,350.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was mixed signals. BTC sat below the 100-day EMA ($27,656). The 50-day EMA narrowed to the 100-day EMA, while the 100-day EMA eased back from the 200-day EMA, sending mixed signals.

A move through the 100-day EMA ($27,656) would support a breakout from R1 ($27,767) and the 200-day EMA ($27,904) to give the bulls a run at R2 ($28,110). However, a fall through the 50-day EMA ($27,283) would bring S1 ($26,847) into view.