ETH Bears Target a Return to Sub-$1,100 as BTC Moves Sideways

Key Insights:

• On Friday, bitcoin (BTC) and ethereum (ETH) succumbed to crypto market forces, with ETH extending its losing streak to three sessions.
• Crypto exchange liquidity fears sent the pair into the deep red, with US economic indicators and the NASDAQ Index adding to the bearish mood.
• Market conditions improved this morning, but headwinds will likely prevent a sustainable recovery.

Ethereum (ETH) tumbled by 7.89% on Friday. Following a 3.13% loss on Thursday, ETH ended the day at $1,167. ETH ended the day at sub-$1,200 for the first time since November 28.

A range-bound start to the day saw ETH rise to a mid-morning high of $1,280. Coming up short of the First Major Resistance Level (R1) at $1,300, ETH slid to a final-hour low of $1,156. ETH fell through the day’s Major Support Levels to end the session at $1,167.

On Friday, bitcoin (BTC) slid by 4.21%. Following a 2.47% loss from Thursday, BTC ended the day at $16,642. Notably, BTC ended the day at sub-$17,000 for the first time in nine sessions.

A bullish start to the day saw BTC rise to a mid-morning high of $17,544. Coming up short of the First Major Resistance Level (R1) at $17,727, BTC slid to a final-hour low of $16,550. BTC fell through the First Major Support Level (S1) at $17,159 and the Second Major Support Level (S2) at $16,945 to end the day at $16,642.

Crypto Exchange Liquidity Jitters and Recession Fears Sink BTC and ETH

BTC and ETH joined the broader crypto market in a sharp reversal on Friday. News of accounting firm Mazars Group removing its recently published Binance Proof-of-Reserves report from its website and suspending crypto-related services sent the crypto market into the deep red.

With the dust yet to settle from the collapse of FTX, fears of a Binance liquidity crunch gripped the market. The extended sell-off came despite Mazars citing concerns regarding the interpretation of the reports as the reason for the removal and suspension of services.

Other Mazars Group clients included KuCoin and Crypto.com.

US economic recession fears added to the bearish mood, with US private sector PMI numbers weighing on investor sentiment. The prelim December PMI numbers showed a more marked US economic contraction at the end of Q4.

The bearish numbers left the NASDAQ Index and the S&P500 with losses of 0.97% and 1.11%, respectively.

This morning, BTC and ETH found support. However, the gains were modest, with investors wary of crypto exchange liquidity issues.

Ethereum (ETH) Price Action

At the time of writing, ETH was up by 0.85% to $1,177. A mixed start to the day saw ETH fall to an early low of $1,162 before rising to a high of $1,182.

Technical Indicators

ETH needs to move through the $1,201 pivot to target the First Major Resistance Level (R1) at $1,246 and the Friday high of $1,280. A return to $1,200 would signal a bullish afternoon session. However, the crypto news wires will need to deliver support for a breakout session.

In the event of an extended rally, the bulls would likely take a run at the Second Major Resistance level (R2) at $1,325. The Third Major Resistance Level (R2) sits at $1,449.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,122 in play. However, barring another event-driven sell-off, ETH should avoid sub-$1,100 and the Second Major Support Level (S2) at $1,077. The Third Major Support Level (S3) sits at $953.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 100-day and the 50-day EMAs, both currently at $1,260. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A bearish cross of the 50-day EMA through the 100-day EMA would bring S1 ($1,122) and sub-$1,100 into view. However, a move through R1 ($1,246) would support a breakout from the EMAs to bring R2 ($1,325) into play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up by 0.46% to $16,718. A range-bound start to the day saw BTC rise to an early high of $16,755 before falling to a low of $16,609.

Technical Indicators

BTC needs to move through the $16,912 pivot to target the First Major Resistance Level (R1) at $17,274 and the Friday high of $17,544. A BTC return to $17,000 would signal a bullish session. However, investors will need convincing reassurances from exchanges of adequate reserves to support the recovery from Friday’s pullback.

In the event of an extended rally, BTC would likely break out from the Second Major Resistance Level (R2) at $17,906 to bring $18,500 into view. The Third Major Resistance Level (R3) sits at $18,900.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,280 in play. Barring a risk-off-fueled sell-off, BTC should avoid sub-$16,000 and the Second Major Support Level (S2) at $15,918. The Third Major Support Level (S3) sits at $14,924. An adverse crypto market event would bring sub-$16,000 into play.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, BTC sat below the 100-day EMA, currently at $17,169. After Friday’s bearish cross, the 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through the 100-day EMA ($17,169) would support a run at the 50-day EMA ($17,252) and R1 ($17,274). However, failure to move through the 100-day EMA ($17,169) would leave S1 ($16,280) in view.