ETH and BTC See Red as Contagion Fears Grow Amid Efforts to Save FTX

Key Insights:

• Bitcoin (BTC) ended a five-day losing streak on Thursday, with ETH revising $1,300 before easing back.
• BTC and ETH responded to news of Justin Sun working on an FTX bailout plan, with US economic indicators delivering a late boost.
• However, it has been a testy morning session, with contagion spreading ahead of the weekend.

Ethereum (ETH) rallied by 17.73% on Thursday. Reversing a 17.54% slump from Wednesday, ETH ended the day at $1,295.

A mixed start to the day saw ETH fall to an early low of $1,084. Steering clear of the First Major Support Level (S1) 1,001, ETH rallied to a late afternoon high of $1,348. ETH broke through the First Major Resistance Level (R1) at $1,268 to end the day at $1,295.

On Thursday, bitcoin (BTC) rallied by 10.44%. Partially reversing a 14.20% slide from Wednesday, BTC ended the day at $17,585. Notably, BTC ended a four-day losing streak while failing to hold onto the $18,000 handle.

A mixed start to the day saw BTC fall to an early low of $15,760. Steering clear of the First Major Support Level (S1) at $14,807, BTC rallied to a late high of $18,156. BTC broke through the First Major Resistance Level (R1) at $17,819 before falling back to end the day at $17,585.

Early in the Thursday session, investors responded to the news of Tron’s Justin Sun working on an FTX bailout plan. Hopes of averting the collapse of one of the largest exchanges allowed investors to redirect attention to the US economic calendar. The US CPI report for October delivered a bullish afternoon session.

Softer inflation figures fueled bets of a December Fed pivot, which sank the dollar while supporting riskier assets.

The NASDAQ Composite Index jumped 7.35% on the day as the probability of a 75-basis point rate hike slid to 17% this morning. According to the FedWatch Tool, the chance of a 75-basis point Fed rate hike stood at 43.2% on Wednesday.

However, investor sentiment soured this morning on contagion news. Overnight, crypto platform BlockFi announced the suspension of withdrawals and limited platform activity, citing the FTX collapse.

There are rumors that BlockFi has hired bankruptcy lawyers, suggesting that BlockFi either has a substantial FTX Token (FTT) holding or holds client assets with FTX or Alameda.

Today, we expect FTX to remain the focal point and key price driver. Progress towards an FTX bailout would deliver much-needed support and ease contagion risk. However, there is the risk of a failed bailout attempt that would have a material impact on BTC, ETH, and the broader crypto market.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 2.26% to $1,266. A mixed start to the day saw ETH rise to an early high of $1,305 before falling to a low of $1,216.

Technical Indicators

ETH needs to avoid the $1,242 pivot to target the First Major Resistance Level (R1) at $1,401. An ETH move through the Thursday high of $1,348 would signal a bullish afternoon session. However, moves through the US session will depend on FTX and contagion news.

In the event of an extended rally, ETH would likely test the Second Major Resistance Level (R2) at $1,506. The Third Major Resistance Level (R3) sits at $1,770.

A fall through the pivot would bring the First Major Support Level (S1) at $1,137 into play. However, barring another extended afternoon sell-off, ETH should avoid sub-$1,000 and the Second Major Support Level (S2) at $978.

The Third Major Support Level sits at $714.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,406. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA converging on the 200-day EMA, delivering bearish signals.

A move through R1 ($1,401) and the 50-day EMA ($1,406) would give the bulls a run at the 200-day EMA ($1,440) and the 100-day ($1,445) EMA. However, a bearish cross of the 100-day EMA through the 200-day EMA would bring S1 ($1,137) into play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 1.32% to $17,353. A mixed morning saw BTC rise to an early high of $17,671 before falling to a low of $16,877.

Technical Indicators

BTC needs to avoid the $17,167 pivot to target the First Major Resistance Level (R1) at $18,574. A move through the Thursday high of $18,156 would signal a bullish session. However, the direction will hinge on updates on FTX and signs of contagion.

In the case of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $19,563 and resistance at $20,000.

The Third Major Resistance Level (R3) sits at $21,959.

A fall through the pivot would bring the First Major Support Level (S1) at $16,178 into play. Barring another extended sell-off, BTC should avoid sub-$16,000 and the Second Major Support Level (S2) at $14,771. However, news of Justin Sun walking away from bailout talks could send BTC to sub-$15,000.

The Third Major Support Level (S3) sits at $12,375.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $18,982. The 50-day EMA slid back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($18,574) would support a breakout from the 50-day EMA ($18,982) to target the 100-day EMA ($19,524) and R2 ($19,716). However, failure to move through R1 ($18,574) and the 50-day EMA ($18,982) would leave BTC under pressure and bring S1 ($16,167) into view.