Bitcoin and Ethereum – Talking Points
- Macroeconomic data point to recession, which reduces risk appetite
- Bitcoin continues to rally around the $20,000 key level
- Ethereum rallies continue to fail in the key $1,400 pivot area
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Bitcoin and Ethereum Outlook: Neutral
Bitcoin and Ethereum continue to walk above their YTD lows as economic data continues to allow the Federal Reserve to remain aggressive in its fight against inflation. Friday’s nonfarm payroll data showed that the US labor market remains hot, although there are some signs of slowing down. With the employment portion of the Fed’s mandate set, Fed officials indicated that they would remain fully committed to bringing inflation back to target. With the Fed’s hawkish policy showing no sign of abating, the outlook remains bleak for risky assets.
Despite the recent surge in US Treasury yields and the crash in stocks, Bitcoin and Ethereum have managed to keep their heads above water. While stocks have breached their lows in June, bitcoin and ethereum have yet to break their lows. This could all change next week, as Thursday’s CPI reading could represent a major volatility event. After the previous CPI release on September 13, risk markets slumped as inflation gauges increased.
US economic calendar
Courtesy of the DailyFX Economic Calendar
Despite Friday’s defeat in risky assets, Bitcoin is still above the recent swing lows. The price appears to be hovering around the key psychological level of $20,000 as the price consolidated in a narrow range after the September 14 CPI reading. The bulls vigorously defended the $18,500 area, while the bears prevented any break above $20,400 from gaining ground. The price has notably recorded a series of higher lows this month, providing support for the idea that something bigger may be at play here. If the markets really “give up” as many are looking for, it is likely that highly speculative assets like Bitcoin will not show such vibrant signs. While more price action is needed, it appears that an ascending triangle is forming in BTCUSD. If this configuration materializes, prices may be higher in the future.
4 hour bitcoin chart
Chart created with TradingView
Like Bitcoin, Ethereum is still well above its YTD lows of $880. ETHUSD remains in a much narrower range than Bitcoin, with the price failing to break into a major pivot area around $1,400. Ethereum suffered greatly after completing the “merger” in September, as the network upgrade turned into a “news sale” event. As the risk outlook continues to deteriorate, market participants may continue to follow economic data closely as Fed policy appears to be driving all markets for the time being. With the risks of a major event on the horizon next week, traders should monitor how/whether Ethereum breaks its recent range. While gravity continues to work hard on stocks and bonds, crypto continues to defy the odds.
Ethereum 4 hour chart
Chart created with TradingView
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