SEC, Bitcoin Mining Power Consumption, and the Future of Digital Assets

The Saturday Session

While dip buyers will likely return after the latest crypto market setback, the crypto market faces downside risk.

The ongoing SEC v Ripple and SEC v Coinbase cases will likely leave the US digital asset space in a regulatory void without US lawmaker involvement. We expect the outcome of the SEC cases against Coinbase and Ripple to define the US digital asset landscape.

However, investors should continue monitoring SEC and US lawmaker activity. Progress toward a digital asset framework would shift sentiment. Investors will likely respond favorably to legislation that drives innovation but protects investors.

Bitcoin (BTC) Price Actions

Daily Chart

On Friday, BTC broke under the trendline to test the $25,506 support band. While BTC broke above the trendline, the near-term bearish trend remains intact. Investor sentiment toward the SEC and the BTC-Spot ETF market joins a growing list of crypto headwinds.

A hold above the trend line would give the bulls a run at the $26,755 resistance band. However, a bearish cross of the 50-day EMA through the 200-day EMA would see BTC break under the trend line and $25,506 support band to target sub-$25,000.

Looking at the 14-Daily RSI, the 35.14 reading shows BTC with room to fall before entering oversold territory.

4-Hourly Chart

Looking at the 4-Hourly Chart, BTC hovers above the trend line and the $25,506 support band. Adverse regulatory activity would support a break below the trend line and the support band to target sub-$25,000.

However, holding above the trend line would support a return to $26,000 to target the 50-day EMA. Updates from the Courts on SEC-crypto cases, spot ETF chatter, and US lawmaker commentary will influence.

The 14-4H RSI reading of 36.74 shows BTC has room to fall, leaving the trend line and the $25,506 support level in play.

Ethereum Price Action

Daily Chart

The Daily Chart showed ETH hovering above the $1,626 support band. The bearish August and start to September left ETH well below the trend line. A bearish cross of the 50-day EMA through the 200-day EMA added further price pressures. The lack of progress toward a BTC-Spot ETF leaves the future of ETH-Spot ETFs uncertain.

However, a hold above the $1,626 support band and a return to $1,650 would give the bulls a run at $1,700 and the $1,746 resistance band.

Looking at the 14-Daily RSI, 35.52 showed ETH has room to fall further before entering oversold territory.

4-Hourly Chart

ETH/USD finds strong support at the $1,626 support level. However, a lack of a crypto catalyst would leave the ETH bearish trend intact. More adverse SEC news would likely lead to a fall through the support band to retarget sub-$1,600.

In the case of a favorable crypto event, an ETH move through the 50-day EMA would give the bulls a run at $1,700 and the 200-day EMA.

The 14-4H RSI reading of 36.46 shows ETH has more room before entering oversold territory.