ETH Bulls Face Resistance at $1,650 on Shanghai Hard Fork Caution

Key Insights:

• It was a mixed Friday for bitcoin (BTC) and ethereum (ETH), with ETH bucking a bullish trend.
• US economic indicators delivered price support, while Shanghai hard fork chatter tested ETH support.
• ETH continued to struggle this morning while BTC held onto the $23,000 handle.

Ethereum (ETH) fell by 0.19% on Friday. Following a 0.74% loss on Thursday, ETH ended the day at $1,598. ETH wrapped up the day at sub-$1,600 for the second time in eight sessions.

A bearish start to the day saw ETH slide to an early morning low of $1,550. ETH fell through the First Major Support Level (S1) at $1,575. However, finding support at the Second Major Support Level (S2) at $1,548, ETH rose to a late high of $1,622. Coming up short of the First Major Resistance Level (R1) at $1,631, ETH fell back to sub-$1,600 and into the red.

On Friday, bitcoin (BTC) rose by 0.27%. Reversing a 0.22% loss from Thursday, BTC ended the day at $23,067. Notably, BTC held onto the $23,000 handle for the third time since August 18.

A bearish start to the day saw BTC slide to an early low of $22,533. BTC fell through the First Major Support Level (S1) at $22,814 and the Second Major Resistance Level (S2) at $22,623. Finding afternoon support, BTC struck a late high of $23,486. BTC broke through the First Major Resistance Level (R1) at $23,234 and the Second Major Resistance Level (R2) at $23,463 before easing back to end the session at $23,067.

Shanghai Hard Fork Sentiment and US Stats Deliver Mixed Session

US economic indicators provided afternoon relief to the crypto market. Softer US inflation figures and a further decline in personal spending supported bets of a Fed pivot.

In December, the Core PCE Price Index increased by 4.4% year-over-year versus 4.7% in November. Personal spending fell for a second consecutive month, aligning with November and December retail sales figures. The decline came despite a pickup in personal income and consumer sentiment.

However, with the Fed delivering its first interest rate decision of 2023 on Wednesday, the crypto market upside was modest. The probability of a 25-basis point interest rate hike stood at 99.2% this morning, unchanged over the last seven days.

While the stats were crypto-friendly, crypto market scrutiny tested buyer appetite. The White House Administration called for US lawmakers to increase regulatory oversight, with the Securities and Exchange Commission targeting investment advisers over crypto custody rules.

The White House Administration’s call for increased vigilance followed the release of the FTX creditor list that included blue chip US corporations and global financial institutions, including Goldman Sachs (GS) and Apple Inc. (AAPL).

On Thursday, we suggested a likely attempt to clamp down on corporate America’s appetite and access to crypto assets.

The White House Administration was clear in its intent, saying,

“In the past year, traditional financial institutions’ limited exposure to cryptocurrencies has prevented turmoil in cryptocurrencies from infecting the broader financial system. It would be a grave mistake to enact legislation that reverses course and deepens the ties between cryptocurrencies and the broader financial system.”

Shanghai hard fork chatter also drew interest. Concerns over the timing of the hard fork tested ETH buyer appetite late in the week. Following the success of the Merge, some developers have raised concerns about a technical debt build-up from moving too quickly.

Currently, the number of developers voicing concerns is small. However, any suggestions of delaying the hard fork beyond March would weigh on ETH.

Today, investors should monitor the crypto news wires for updates on FTX and Genesis, with Shanghai hard fork chatter also needing consideration.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 0.13% to $1,596. A mixed start to the day saw ETH rise to an early high of $1,607 before falling to a low of $1,593.

Technical Indicators

ETH needs to avoid a fall through the $1,590 pivot to target the First Major Resistance Level (R1) at $1,630. A move through the Friday high of $1,622 would signal a breakout session. However, the crypto news wires will have to be crypto-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,662. The Third Major Resistance Level (R3) sits at $1,734.

A fall through the pivot would bring the First Major Support Level (S1) at $1,558 into play. However, barring a broad-based crypto market sell-off, ETH should avoid sub-$1,550 and the Second Major Support Level (S2) at $1,518. The Third Major Support Level (S3) sits at $1,446.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat at the 50-day EMA, currently at $1,586. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1,586) would support a breakout from R1 ($1,630) to target R2 ($1,662). However, a fall through the 50-day EMA ($1,586) would give the bears a run at S1 ($1,558) and the 100-day EMA ($1,537). A fall through the 50-day EMA would send a bearish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.07% to $23,083. A mixed start to the day saw BTC fall to an early low of $23,043 before rising to a high of $23,181.

Technical Indicators

BTC needs to avoid a fall through the $23,029 pivot to target the First Major Resistance Level (R1) at $23,524. A move through the Friday high of $23,486 would support a bullish session. However, the crypto news wires should be market-friendly to deliver a breakout.

In the event of another extended rally, BTC would likely test the Second Major Resistance Level (R2) at $23,982 and resistance at $24,000. The Third Major Resistance Level (R3) sits at $24,935.

A fall through the pivot would bring the First Major Support Level (S1) at $22,571 into play. However, barring a broad-based crypto sell-off, BTC should avoid sub-$22,500 and the Second Major Support Level (S2) at $22,076. The Third Major Support Level (S3) sits at $21,123.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA, currently at $22,483. The 50-day EMA pulled further away from the 200-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($22,571) and the 50-day EMA ($22,483) would support a breakout from R1 ($23,524) to target R2 ($23,982) and $24,000. However, a fall through S1 ($22,571) and the 50-day EMA ($22,483) would give the bears a run at S2 ($22,076). A fall through the 50-day EMA would send a bearish signal.