Crypto Warning: Supreme Court Ruling Creates New Downside Risks for Crypto Markets

Crypto warning surfaced Thursday as analyst Dan Gambardello flagged upcoming Supreme Court decision on tariffs that could cause volatility across crypto markets.

The ruling, scheduled for Friday morning, has high odds of declaring the tariffs illegal, which would force a massive $133 billion refund of collected revenue.

Bitcoin dropped 10% to its local bottom during Trump’s tariff announcements in April. Unemployment data is also released on Friday morning, creating two major catalysts that hit simultaneously.

Supreme Court Ruling Creates Short-Term Volatility Risk

The crypto warning centers on Friday morning’s Supreme Court decision, with approximately 70% odds of striking down existing tariffs.

Crypto Rover posted an analysis showing the April swing low in Bitcoin, when tariff fears hit the markets. The analyst stated that the hours ahead, leading up to Friday morning, will be volatile due to the dual catalysts.

Bitcoin fell to mid-$70,000 levels during April tariff announcements, creating a lower low that looked terrible for crypto markets.

That swing low actually marked the bottom before recovery. The question is whether Friday’s ruling will create a similar move with Bitcoin falling back into the lower $80,000s or upper $70,000s.

Gambardello noted that markets might react positively to the news if tariffs are eliminated, potentially causing green candles and testing moving averages.

The uncertainty around market reaction creates the volatility risk. The analyst emphasized the need to watch downside potential, given April’s precedent.

Crypto Markets Face $86K-$83K Support Test on Bitcoin

The crypto warning identified specific support levels to watch if Bitcoin declines Friday.

Using Fibonacci retracement from the November swing low to the recent swing high, the $86,000 to $83,000 range represents higher low support. This zone could see a big red day if crypto markets don’t like the data from Friday.

The analyst emphasized not freaking out if this support area is tested. Going back to the tariff fear in April, Bitcoin put in a lower low, falling into the mid-$70,000s before bouncing.

The first area of support should be watched before discussing lower lows. If the $83,000 support fails, Bitcoin may test areas from April’s tariff capitulation.

On the daily chart, Bitcoin displays convergent support at the 20- and 50-day moving averages. The 20-day moving average is making its way above the 50-day moving average, with a wick on the current daily candle.

Without the tariff announcement, this support would be the main technical discussion. The Supreme Court ruling adds uncertainty to this technical setup.

The analyst clarified he is not saying crypto markets will absolutely dip. The analysis provides contingency planning if markets don’t like Friday’s data.

Both the Supreme Court ruling and unemployment data could significantly impact crypto markets.

Ethereum 20-Week Approaches 50-Week Moving Average

The crypto warning extended to Ethereum technical analysis. The 20-week moving average is falling toward the 50-week moving average. This creates a pattern that has only happened a handful of times for Ethereum.

Historical analysis shows that when Ethereum’s 20-week fell below the 50-week, different outcomes happened depending on macroeconomic conditions.

In 2018, during the beginning of quantitative tightening, the bottom came 154 days after the cross. In 2022 at the end of quantitative tightening, the cross almost marked the bottom.

In late 2024, the 20-week moving average fell below the 50-week moving average, while the Fed was still in the process of quantitative tightening. The move was the bottom with more consolidation before the October-November rally. The current setup has not seen the cross yet, but the 20-week is approaching the 50-week.

The analyst emphasized current conditions resemble the end of quantitative tightening, not the beginning.

Quantitative tightening ended on December 1, placing crypto markets in an environment similar to 2019-2020 pre-bull market conditions rather than 2018 or 2022 bear market beginnings.

Macro Setup Differs from Previous Bear Markets

The crypto warning included macro context separating current conditions from previous bear cycles. The analyst stated we are at the end of quantitative tightening, not the beginning or middle.

This distinction changes everything for the crypto market outlook. Record-breaking quantitative tightening prevented altcoins from having a bull market this cycle.

Risk models show no bull market occurred for Ethereum during this cycle. There have been swing highs and swing lows, but no high-risk scores indicating immediate profit-taking.

The risk scores never reached the 90s or 100 levels that mark cycle tops. The current Ethereum risk score sits at 39, considered pre-bull market territory.

The analyst compared it to November 2019, when the Ethereum risk score was 13 after a bear market.

Current conditions are similar to consolidation after quantitative tightening rather than at the beginning of a multi-year bear cycle. The 20-week falling below 50-week in 2019 preceded a bull move.

The crypto warning concluded that yes, crypto markets chop sideways or go lower, testing Ethereum’s 200-week moving average around $2,400-$2,500.

Bitcoin may need to establish a higher low than April’s swing low. But the macro data is lining up for a bull move rather than a prolonged bear market.