Bitcoin, Ethereum - Talking Points
- Bitcoin slips back below $20,000 during broad risk rout
- Ethereum continues to make higher lows
- Fed rate hike continues to cloud the macro picture
Bitcoin and Ethereum Outlook: Bearish
Risk assets struggled mightily this week following the Federal Reserve’s interest rate hike, as surging US Treasury yields have dampened risk appetite. Concerns continue to mount over the rate at which the Fed is tightening, with many believing it will eventually cause a recession. These recession fears were compounded Friday by a surging US Dollar, as PMI data and weakness in the Sterling gave the Greenback a strong bid. With the macro environment remaining challenged, Bitcoin and other cryptos look likely to follow the footsteps of mainstream risk assets.
Despite the rout Friday across asset classes, Bitcoin and Ethereum both failed to make fresh weekly lows. This relative strength offers a reason to be optimistic, but it will be challenging for any bounce to sustain itself for very long. Sellers remain in control regardless of the asset as market participants essentially shed themselves of everything.
Bitcoin 1 Hour Chart
Chart created with TradingView
Bitcoin sits finely poised ahead of next week, having held above the post-FOMC weekly low around $18150. In FOMC volatility, Bitcoin was unable to reclaim the key psychological level at $20,000. Since Wednesday, price has made a lower high around $19500. Interesting to note is that price did not retest the weekly lows during Friday’s massive risk sell-off, which potentially opens the door to some modest weekend gains. Traders will likely watch the crypto markets over the weekend, as they offer a glimpse into risk appetite while major markets are closed. Given the state of affairs, BTCUSD may look to put in another test of the weekly support zone found near $18300.
Ethereum 1 Hour Chart
Chart created with TradingView
Ethereum has struggled following the completion of “the merge,” the long awaited network upgrade. Like Bitcoin, Ethereum has made a higher low in the wake of this week’s Federal Reserve meeting. In fact, ETH has carved out a series of higher lows. Despite this, a longer series of higher lows makes it difficult to constructively be bullish on Ethereum. We may be in for fireworks over the weekend of the triangle that has been brewing over the last week provides a break. The next leg for Ethereum may depend on how investors react when they come back to the market on Monday, as they prepare for next week’s blockbuster PCE print. With upside currently limited by a resistance zone around $1400, I favor a retest of last week’s lows around $1220.
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--- Written by Brendan Fagan
To contact Brendan, use the comments section below or@BrendanFaganFXon Twitter
