ETH Eyes $1,450 as the SEC Overshadows Shanghai Hard Fork Progress

Key Insights:

• It was a bearish Friday session for bitcoin (BTC) and ethereum (ETH), with BTC ending the day at sub-$22,000 for a second session.
• Fed Fear and crypto regulatory risk overshadowed Shanghai hard fork updates.
• This morning, ETH and BTC found modest support but will continue to face downside risks.

Ethereum (ETH) fell by 2.13% on Friday. Following a 6.36% slide on Thursday, ETH ended the day at $1,513. ETH revisited sub-$1,500 for the first time since January 14.

A bullish start to the day saw ETH rise to an early high of $1,555. Coming up short of the First Major Resistance Level (R1) at $1,627, ETH slid to a late low of $1,491. However, finding support at the First Major Support Level (S1) at $1,495, ETH wrapped up the day at $1,513.

On Friday, bitcoin (BTC) fell by 0.73%. Following a 5.04% slide on Thursday, BTC ended the day at $21,641. BTC wrapped up the day at sub-$22,000 for the second time since January 19.

A bullish start to the day saw BTC rise to an early high of $21,937. Coming up short of the First Major Resistance Level (R1) at $22,635, BTC fell to a late low of $21,500. Steering clear of the First Major Support Level (S1) at $21,332, BTC found late support to end the day at $21,641.

SEC Regulation by Enforcement and Fed Fear Overshadows Hard Fork News

Fed Fear and SEC regulatory activity continued to weigh on investor sentiment on Friday. US economic indicators delivered further reason for the Fed hawkish to push for a more aggressive interest rate path to bring inflation to target.

The Michigan Consumer Sentiment Index rose from 64.9 to 66.4 in February, according to prelim figures. Significantly, the Michigan Inflation Expectations Index increased from 3.9% to 4.2%, fueling fears of a more hawkish Fed policy stance.

With hawkish Fed chatter hitting the markets in the second half of the week, next week’s US CPI Report will be the next hurdle for investors. A pickup in US inflationary pressure would be price negative.

SEC regulation by enforcement also continued to weigh on buyer appetite. The threat to US crypto staking services and the issue of security or not security remain crypto market headwinds. Investors hope the ongoing SEC v Ripple case will end favorably, however, to force US lawmakers to give greater regulatory authority to the CFTC.

The news of Kraken settling with the SEC and ceasing US crypto staking services will likely continue to resonate over the weekend. However, looking ahead, a Ripple victory could lead to lesser SEC powers.

Bearish sentiment toward Fed monetary policy and the SEC muted the influence of the latest Shanghai hard fork news on ETH.

On Friday, Ethereum announced the second round of testing of staked ETH withdrawals. The Sepolia testnet follows the Zhejiang testnet and precedes the Goerli testnet and the heavily anticipated Shanghai hard fork. Unlike the public Zhejiang testnet, the Sepolia testnet will only be available to Ethereum developers from February 28.

Continued progress toward the Shanghai hard fork is ETH price positive though dependent upon other market forces.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.60% to $1,522. A mixed morning saw ETH fall to an early low of $1,508 before rising to a high of $1,526.

Technical Indicators

ETH needs to avoid a fall through the $1,520 pivot to target the First Major Resistance Level (R1) at $1,548 and the Friday high of $1,555. A return to $1,550 would signal a breakout session. However, Shanghai hard fork updates and the crypto news wires should be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,584 and resistance at $1,600. The Third Major Resistance Level (R3) sits at $1,648.

A fall through the pivot would bring the First Major Support Level (S1) at $1,484 into play. However, barring another broad-based crypto market sell-off, ETH should avoid sub-$1,450. The Second Major Support Level (S2) at $1,456 should limit the downside. The Third Major Support Level (S3) sits at $1,392.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 200-day EMA, currently at $1,547. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A bearish cross of the 50-day EMA through the 200-day EMA would support a slide through S1 ($1,484) to bring S2 ($1,456) into play. However, a move through the 200-day EMA ($1,547) and R1 ($1,548) would give the bulls a run at R2 ($1,584) and the 100-day ($1,599) and 50-day ($1,602) EMAs. A move through the 50-day EMA would send a bullish signal.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.26% to $21,697. A range-bound start to the day saw BTC fall to an early low of $21,614 before rising to a high of $21,718.

Technical Indicators

BTC needs to avoid a fall through the $21,693 pivot to target the First Major Resistance Level (R1) at $21,885 and the Friday high of $21,937. However, a return to $22,000 would signal a breakout session. The crypto news wires need to 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 $22,130. The Third Major Resistance Level (R3) sits at $22,567.

A fall through the pivot would bring the First Major Support Level (S1) at $21,448 into play. However, barring another risk-off-fueled crypto sell-off, BTC should avoid sub-$21,000. The Second Major Support Level (S2) at $21,256 should limit the downside. The Third Major Support Level (S3) sits at $20,819.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. BTC sat below the 200-day EMA ($21,702). The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 200-day EMA (21,702) would give the bulls a run at R1 ($21,885) and $22,000. However, a bearish cross of the 50-day EMA through the 100-day EMA would bring S1 ($21,448) into view. A move through the 50-day EMA would send a bullish signal.