News Updates May 26 & 27, 2023

1. Bitcoin Lingers Below $26.5 Amid Debt Ceiling Worries

Unemployment and productivity data arrived stronger than expected but investors seemed focused narrowly on the ongoing negotiations that will determine if the U.S. government has to default on its debts.

The U.S. announced unexpectedly strong unemployment and GDP data, but crypto investors had debt ceiling negotiations on their minds, Thursday.

They recently kept bitcoin lingering under $26,500, up about 0.3% but below its most recent nearly two-week-long range between this threshold and $27,500. The largest cryptocurrency by market capitalization has lost some of its 2023 gains in recent weeks as investors wrestle with a mix of macroeconomic uncertainties, most prominently of late the U.S.’s ongoing debt limit stalemate that will determine whether the U.S. government can pay its bills. On Thursday, Republican House lawmakers reported progress in discussions with the White house, but whether the sides can reach agreement in time to avert a government default remains uncertain.

"Debt ceiling concerns are definitely weighing on BTC and crypto generally,” Riyad Carey, research analyst at digital assets data provider Kaiko, wrote via Twitter to CoinDesk. “We've been fairly range-bound in the past few weeks as there have not been many crypto-specific catalysts.

Carey does not expect any dramatic price shift in bitcoin’s price in the near future, if not beyond with the next major catalyst, the BTC halving, almost a year away. “Of course, regulatory developments could shake this up,” he wrote.

Ether was recently changing hands at just over $1,812 up roughly 0.3% from Wednesday, same time. Most other major cryptos assumed faint shades of green with MATIC, the token of layer 2 platform Polygon, recently rising 2%. The CoinDesk Market Index, a measure of crypto markets performance, was up 0.46%.

Tech stocks seemed to levitate after chipmaker Nvidia said sales would rise because of the growth of artificial intelligence protocols. The tech-heavy Nasdaq Composite and S&P 500, which has a hefty technology component climbed 1.7% and 0.9%, respectively. Safe haven asset gold continued itsrecent decline less than a month after reaching a near record high, falling more than a percentage point to trade at $1,959.

But assets of all stripes seemed largely unmoved by Thursday’s jobs data, which showed 229,000 Americans filing unemployment benefits last week, well below the anticipated 245,000, and the U.S. economy expanding 1.3%, the third consecutive quarter of growth. Earlier this year and throughout 2022, such news might have sent digital assets cascading, but CoinDesk analyst on Thursday highlighted a shift in the good-economic-news-leads-to-lower-crypto- prices narrative.

2. 2 Possible Secnarios for Bitcoin in the Next Few Days (BTC Price Analysis).

Over the past few weeks, Bitcoin’s price has been consolidating within a narrow range after breaking below the 50-day moving average. The market is currently situated between two notable levels, leaving room for several potential scenarios to unfold.

Technical Analysis

The Daily Chart:

The price on the daily timeframe has yet to display a notable upward or downward movement. If a rally takes place in the upcoming weeks, the first resistance level to watch is the 50-day moving average positioned around $28K, followed by the crucial $30K level.

On the other hand, for holders, the key support areas to rely on are the $25K level and the 200-day moving average of around $23K. The RSI indicator remains below the 50% threshold without much movement, indicating the current bearish momentum and increasing the likelihood of a downward move in the short term.

The 4-Hour Chart:

On the 4-hour chart, the price remains within a significant descending channel. Although there was a recent upward push prompted by the minor support level at $26K, there is still a strong possibility of a decline towards the lower boundary of the channel and the support area at $25K.

Conversely, for a rally to occur, the market must first break through the resistance level at $27,500. If this happens, the chances of a breakout above the channel and a subsequent retest of the resistance area at $30K would increase.

Bitcoin Miners Reserve

While Bitcoin’s price has been relatively stagnant, examining on-chain metrics can help us understand the underlying dynamics.

The following chart focuses on the Bitcoin miner reserve metric, which quantifies the amount of BTC held by miners, a significant group within the ecosystem.

The data clearly illustrates a consistent decline in this metric over the past 9 months, indicating that miners have been selling their coins to cover operational expenses or mitigate risks in an uncertain macroeconomic climate.

This decline has intensified, signifying that miners are capitalizing on the recent price increase to sell their coins at a higher level. If this trend persists, a bearish reversal will likely occur in the near future. The continuous selling pressure from miners could result in an oversupply of bitcoins in the market, leading to a potential downtrend in price.