BTC and ETH in a Downtrend as Volatility Looms
When it comes to the world of cryptocurrencies, Bitcoin and Ethereum have been in a bit of a slump lately. With crucial inflation data looming, these two major cryptos are trading within key support levels, preparing for the spike in volatility that is expected to follow.
In July, Bitcoin slipped below the important $30,000 support level, and now that area has transformed into a resistance level. As we enter August, the attempts to break through the $30,000 barrier are feeble, indicating that the selling pressure remains significant.
Last week, Bitcoin stayed stagnant at $29,000 after experiencing volatile price swings. And unfortunately, the downward trend continues, with low trading volume to support it.
On the daily chart, Bitcoin broke below the 2023 uptrend, marking the second time this year that it has violated this trend. Now, the $28,750 level has become a crucial support level for the coming days. This area corresponds to the Fib 0.382 of the trend that started in June at $25,000 and reached $31,500. Additionally, the 3-month EMA value acts as another support line at $28,750.
If Bitcoin closes below the $28,750 – $28,900 range this week, it could trigger rapid downward movements, potentially leading to a short-term drop to $26,000. The short-term exponential moving average (EMA) values also support a bearish outlook, with the 8-EMA crossing below the 21-EMA, creating resistance around $29,200 to $29,400.
However, signs of buying weakness can be seen in the Stochastic RSI on the daily chart. It remains in oversold territory, indicating a possible upside breakout if Bitcoin tests the $30,000 band again and achieves daily closes in that region, leading to potential upward reactions.
Ultimately, the price levels of $28,750 on the lower side and $30,000 on the upper side will be closely monitored to determine Bitcoin’s next direction. The upcoming US inflation data will play a crucial role in influencing the volatility of the crypto markets. Additionally, this data will significantly impact the Federal Reserve’s interest rate decisions. While there is no Federal Open Market Committee (FOMC) meeting in August, another inflation data release before the September meeting could have an impact on risky markets. Positive US inflation data without pressure from the Fed could potentially signal a recovery in August.
Turning to Ethereum, this crypto has been experiencing a gradual downtrend since being rejected at the $2,000 level last month. Last week, Ether found support at $1,850 and has been seeking further support at $1,825. Currently, Ethereum is trading within the range of $1,825 to $1,850.
If we see daily closures below $1,825 in this week’s transactions, it may accelerate the downward momentum. This is because the short-term EMA values are likely to move below the 3-month EMA value, which is considered a bearish signal.
In this scenario, a possible bearish momentum could cause Ethereum to decline to $1,730 initially. If it fails to hold this support, it could drop even further to $1,650.
On the other hand, a recovery can be anticipated if Ethereum surpasses the $1,880 mark. Daily closes above this value could reverse the negative outlook and potentially lead Ethereum to start a short-term uptrend toward $2,150.
All in all, the price of Ethereum must maintain the $1,825 level this week to avoid further losses and potentially pave the way for a positive turnaround.
As always, it’s important to approach any investment decision with caution and conduct thorough evaluations from multiple perspectives. Cryptocurrencies are highly risky assets, and any decision to invest should be made with proper research and understanding of the associated risks.
Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or investment recommendation. As such, it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any asset is evaluated from multiple perspectives and is highly risky. Therefore, any investment decision and associated risks remain with the investor.
