ETH Bears to Test $1,200 on Recession Talk, with BTC Eying Sub-$16,500

Key Insights:

• On Wednesday, bitcoin (BTC) and ethereum (ETH) joined the broader crypto market in negative territory, with ETH falling to its lowest level of the current month.
• Risk aversion weighed on riskier assets on fears of a global economic and US economic recession.
• While finding early support, BTC and ETH remain at risk of further losses, with Fed pivot uncertainty an additional pressure point.

Ethereum (ETH) slid by 3.07% on Wednesday. Reversing a 0.95% gain from Tuesday, ETH ended the day at $1,232. The bearish session left ETH short of $1,300 for the second consecutive session.

A bullish start to the day saw ETH rise to an early high of $1,278. However, coming up short of the First Major Resistance Level (R1) at $1,283, ETH slid to a mid-day low of $1,215.

ETH fell through the First Major Support Level (S1) at $1,250 and the Second Major Support Level (S2) at $1,230. However, finding afternoon support, ETH broke through S2 to end the day at $1,232.

On Wednesday, bitcoin (BTC) slid by 1.45%. Reversing a 0.70% gain from Tuesday, BTC ended the day at $16,846. The bearish session saw BTC end the day at sub-$17,000 for the fourth time in eight sessions.

A mixed morning saw BTC rise to an early morning high of $17,156 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $17,166, BTC slid to a late morning low of $16,701. BTC fell through the First Major Support Level (S1) at $16,965 and the Second Major Support Level (S2) at $16,836.

However, finding afternoon support, BTC broke back through R2 to end the day at $16,846.

Economic Recession Fears and the NASDAQ Send BTC and ETH South

US economic indicators have failed to ease investor fears of a US economic recession. On Wednesday, the NASDAQ Composite Index fell by 0.51% in response to US bank chatter of a US recession.

Early in the Wednesday session, economic indicators from China weighed on riskier assets. Dire trade data that included a sharp decline in imports and exports raised the fear of a global economic recession.

Fed policy uncertainty has added to the bearish sentiment. Despite the US Jobs Report and the ISM Non-Manufacturing PMI, the markets are still betting on a December Fed pivot.

A dollar-bullish US CPI report could discount Fed Chair Powell’s talk about slowing the pace of interest rate hikes. The US CPI report is due on Tuesday, December 13.

Today, US economic indicators are unlikely to have too much influence, with the weekly jobless claims in focus. Initial jobless claims would have to fall to sub-200k or climb to 300k to move the dial. With stats on the lighter side, market risk sentiment and the NASDAQ Composite Index will continue to provide direction.

Beyond the Fed and the US stats, investors will need to continue monitoring the crypto news wires. Updates on FTX and regulator chatter will remain a focal points, with the threat of a global economic recession likely to leave the crypto market more sensitive to the talk of a more stringent regulatory environment.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.25% to $1,229. A mixed morning saw ETH rise to an early high of $1,239 before falling to a low of $1,222.

Technical Indicators

ETH needs to move through the $1,242 pivot to target the First Major Resistance Level (R1) at $1,268 and the Wednesday high of $1,278. A return to $1,250 would signal a bullish afternoon session.

In the event of an extended rally, the bulls would likely take a run at the Second Major Resistance level (R2) at $1,305. The Third Major Resistance Level (R2) sits at $1,368

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,205 in play. However, barring a risk-off-fueled sell-off, ETH should avoid sub-$1,190 and the Second Major Support Level (S2) at $1,179. The Third Major Support Level (S3) sits at $1,116.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 100-day EMA, currently at $1,247. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 100-day ($1,247) and the 50-day EMA ($1,250) EMAs would support a run at R1 ($1,268) and the 200-day EMA ($1,272). However, a failure to move through the 100-day ($1,247) would bring S1 ($1,205) and sub-$1,200 into view.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.11% to $16,827. A mixed morning saw BTC rise to an early high of $16,894 before falling to a low of $16,795.

Technical Indicators

BTC needs to move through the $16,901 pivot to target the First Major Resistance Level (R1) at $17,101 and the Wednesday high of $17,156. A return to $17,000 would signal a bullish session.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $17,356. The Third Major Resistance Level (R3) sits at $17,811.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,646 in play. Barring an extended sell-off, BTC should avoid sub-$16,000. The Second Major Support Level (S2) at $16,446 should limit the downside. The Third Major Support Level (S3) sits at $15,991.

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 $16,905. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through the 50-day ($16,905) and the 100-day ($16,916) would support a run at R1 ($17,101) and the Wednesday high of $17,156. However, failure to move through the 50-day EMA ($16,905) would leave S1 ($16,646) and sub-$16,500 in view.