Bi-monthly Advanced Technical Report March 22, 2023
Binance Research Team
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While investors braced for the conclusion of the Federal Reserve’s policy meeting, on March 22 Bitcoin price climbed higher toward $29,000. However, the crypto market slid after the Fed enacted a 25 basis point increase on interest rates, citing caution regarding the recent banking crisis.
Analysts believe that Fed Chairman Jerome Powell’s statement indicating that the rate hikes could continue as stabilization is in the works could weaken the momentum that has been fueling the crypto market’s rise in recent days.
The recent traditional banking sector crisis ignited by the shutdown of Silicon Valley Bank (SVB) pushed USD Coin (USDC) in losing its peg – as it was unclear if Circle could access its funds. The stablecoin quickly regained its peg after the Federal Deposit Insurance Corporation stated that it would backstop all deposits held at SVB and after Circle confirmed that it could access its reserves at SVB.
In the span of a week, the crypto-friendly Signature Bank was closed by New York regulators, allegedly to protect the US economy and strengthen the public’s confidence in the banking system.
The United States Federal Reserve was forced to lend banks $300 billion in emergency funds and nearly half of the funds went to SVB and Signature Bank. A recent analysis by economists found that a large number of banks are at risk from uninsured deposit withdrawals – which comes as a reminder of the fragility of the traditional banking system.
The Mid-Size Bank Coalition of America has requested federal regulators in the US to extend insurance on all deposits for the next two years in an attempt to stabilize the banking industry and prevent additional bank failures.
While the recent rise in interest rates brought down the US banking system’s asset market value by $2 trillion, the crypto market quickly reclaimed $1 trillion in market capitalization. Analysts believe that the ongoing weakness in the banking system was one of the main drivers of the latest Bitcoin rally.
Derivatives traders appear to be taking advantage of recent market conditions, as demand for neutral-to-bullish call options has increased, an indication of a growing risk appetite.
Bitcoin slides slightly following Fed rate hike
Analysts are optimistic for the leading digital asset to sustain the bullish momentum and maintained that it would be crucial for the buyers to step in and hold above $25,000.
Market commentators also speculate that due to the recent banking crisis, some of the stablecoins were affected, which created selling pressure. Shortly after the initial shock, investors may have started to invest in the largest cryptocurrency – as an alternative to the traditional banking system that was relatively more stable than stablecoins at the time.
Bitcoin had an impressive rally, surging above the 200-week Simple Moving Average (SMA) and potentially flipping the level to support from resistance. While the largest cryptocurrency by market capitalization headed toward $29,000 on March 21, the latest Fed rate hike is now testing the strength of the bulls.
The Bitcoin 3-day chart also depicts a positive outlook for the pioneer cryptocurrency, projecting a cup with handle chart pattern that has an innate upside target of a 38% surge from the neckline at $25,124. However, the bullish narrative would be invalidated if BTC drops below the aforementioned level of support.
The Relative Strength Index (RSI) has flashed an alarming sign as it indicates that strength is declining from the buy side – a bearish divergence that could suggest a small pullback or correction.
Key resistance levels to look out for:
$31,071 - 127.2% Fibonacci extension level
$33,480 - 200 three-day SMA
Key support levels to look out for:
$25,125 - Neckline of the cup with handle pattern and 78.6% Fibonacci retracement level
$23,069 - 61.8% Fibonacci retracement level
Ethereum could be shaken by pending withdrawals
While Ethereum was expected to take the spotlight last week due to its Shanghai-Capella testnet upgrade, also known as Shapella, the banking crisis in the United States continued to be the center of attention.
On March 14, the hard fork was executed on the Goerli test network, a final dress rehearsal before staked Ether withdrawals can be activated on the mainnet. The upgrade would allow validators on the network to withdraw the ETH they have staked and locked since 2020.
Analysts expect that there would be an influx of staking withdrawals when the functionality goes live on the Ethereum network scheduled in mid-April, which could cause fluctuations in ETH price.
Ethereum price climbed 6% after the hard fork was deployed on the testnet, but the bullish momentum was short-lived as the second largest cryptocurrency by market capitalization closed around $1,700 on the same day.
Key resistance levels to watch:
$2,056 - 127.2% Fibonacci extension level
$2,325 - 161.8% Fibonacci extension level
Key support levels to watch:
$1,679 - 78.6% Fibonacci retracement level
$1,603 - 50-week SMA
$1,433 - 200-weel SMA
Binance Coin busts through critical resistance
Binance Coin has broken above a crucial resistance level, above the upper boundary of the symmetrical triangle pattern on the weekly chart at $321. The escape above the aforementioned hurdle confirms accelerating interest and confidence from buyers.
Should the bullish momentum be sustained, the token will target the 100-week SMA at $369, then at the 127.2% Fibonacci extension level at $380.
Key resistance levels to keep an eye on:
$369 - 100-week SMA
$380 - 127.2% Fibonacci extension level
Key support levels to keep an eye on:
$319 - 78.6% Fibonacci retracement level
$297 - 61.8% Fibonacci retracement level at 50-week SMA
***Note: Binance encourages our users to trade responsibly. Trading can be engaging and fun, but trading is a serious business, and it can lead to financial and emotional distress. Trading derivatives carries risk, and cryptocurrencies and other digital assets often have high levels of price volatility.
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