- Cryptocurrency markets remain in a tight range as US default risk looms
- Bitcoin, Ethereum have traded on significantly low volumes
- Ethereum faces selling pressure below $1,850 as Bitcoin moves into the support zone
Cryptocurrency markets have been trading in a tight range as the risk of a US default looms, and uncertainty over the debt ceiling continues.
Under normal circumstances, cryptocurrencies, particularly Bitcoin, would have reacted positively to Powell’s testimony last week. But the risk of a US debt default, which is also heavily affecting global markets, is fueling uncertainty in the markets and preventing positive developments from being priced in.
Some economic data scheduled to be released in the US this week have also kept investors on their toes. FOMC’s May meeting minutes on May 24 could trigger volatility in the markets, as we have seen in recent months. In addition, the Federal Reserve Governors will continue to speak this week, which may keep the markets moving sideways.
Personal Consumption Expenditures data will be released in the US on Friday. A continued downward trend in the data may positively impact crypto markets as it will signal reducing inflationary pressures. However, the main focus remains on the US default risk and the debt ceiling decision.
The significantly low volume in crypto markets has led to muted trading. This could result in price compression and high volatility going ahead. Bitcoin and Ethereum both need a catalyst to escape selling pressure and resume their uptrends.
h2 Bitcoin/h2
After attempting to break into the $30,000 range several times in May, Bitcoin faced increasing selling pressure and retreated to the support area between $26,500 and $27,000 on the daily chart.
Bitcoin has moved between the $26,500 and $27,000 range since May 11. It has consistently closed above its 3-month exponential moving average, currently at $26,600.
If Bitcoin opens and closes below the $26,500 – $26,600 range, it could indicate a downward breakout from its sideways trend. This may result in a further decline toward the intermediate support level at $25,300 and potentially down to the $24,000 level soon after that.
On the other hand, positive developments regarding the US debt crisis could compound the impact of a potential rate-hike pause by the Fed.
Get The News You Want
Read market moving news with a personalized feed of stocks you care about.
Get The App
If anything positive is said in the upcoming FOMC minutes on Wednesday, it may spark upward momentum in the latter half of the week. Technically, a daily closing above $27,400 could trigger a recovery in Bitcoin, signaling an upward breakout from its sideways trend.
In terms of short-term targets, the first resistance level is around $28,000. If Bitcoin surpasses this level, the $29,000 – $29,600 range will be key before approaching $30,000.
h2 Ethereum/h2
Ethereum, like Bitcoin, has experienced a retreat this month and is currently trading within the range of $1,750 to $1,850.
Ethereum will face selling pressure as long as it stays below $1,850. But, low trading volumes have limited the impact of this pressure. Currently, the $1,750 to $1,780 range is a support. If it breaks below, the next support level is at $1,660.
If buyers dominate the market and volume increases, a daily close above $1,850 becomes important for Ethereum. This would break the 21-day EMA and could push Ethereum toward $1,950.
Reaching $1,950 would end the short-term downtrend since April, allowing Ethereum to continue its upward trend as long as it stays above this level.
However, the weak Stochastic RSI suggests that Ethereum may retest support levels before moving up.
***
Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling, or investment recommendation. As such, it is not intended to incentivize the purchase of assets in any way. I want to remind you that any type of asset is evaluated from multiple points of view and is highly risky; therefore, any investment decision and the associated risk remain with the investor.
Written By:
Investing.com
