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Bitcoin and Ethereum have been trading sideways for several weeks after a sharp surge in mid-August. However, that absolutely does not mean the downtrend that began last year is over. On the daily timeframe, Bitcoin has got stuck in a sideways channel between $60,000 and $82,500, while on the weekly timeframe, the downtrend persists. So, despite what anyone says, we do not believe a new "bull" trend began over the summer. Besides, most experts still point to the magic of the four-year cycle, which suggests Bitcoin should finish its year-long corrective decline this autumn and start forming a new bull trend. But the four-year cycle is not the Great Pyramid — it is not eternal.
This week, two important events should have triggered a drop in the flagship and second-largest cryptocurrencies. First, the US Senate failed to pass the much-talked-about Clarity Act, which is intended to create a regulatory framework for the crypto and digital asset sector in the United States. Then, the Fed took a hawkish stance, declaring readiness to proceed with rate hikes until inflation returns to 2%. Many experts had linked a new leg of the bull market to passage of the Clarity Act because its approval would make investing in Bitcoin and Ethereum much easier and safer. But the Senate refused to vote on the bill, and several Republicans even opposed it, although the bill is being actively promoted by Donald Trump.
Kevin Warsh openly opposed Donald Trump as well. Admittedly, we did not fully believe Warsh would take a position independent of the White House, but yesterday's meeting showed the rate-setting committee is not afraid of Trump, and Kevin Warsh does not consider him a patron and will not simply follow White House directives. If the federal funds rate continues to rise, demand for safe assets will increase at the expense of risky ones. It is hard to find riskier assets than cryptocurrencies. Therefore, the probability of Etherrum and Bitcoin falling before year-end is growing. Only a classic, strong pump can save "digital gold" and "digital silver." Remember: it is not news that determines instrument moves in any market — it is the actions of market participants.
Bitcoin continues to form a downtrend despite the strong mid-August rally. We still expect a decline toward $57,500 (the 61.8% Fibonacci level measured from the three-year uptrend), although that level has essentially already been played out. But we do not believe the downtrend has ended. The latest rise in the leading cryptocurrency looks very weakly like a correction, but that alone is not a sufficient reason to open longs. Liquidity could be taken from the $82,850 high, which could trigger a new leg down. On the 4-hour timeframe, a rise may start soon with targets of $78,400 and $81,200, since a deviation has formed near the lower boundary of the sideways channel.
On the daily timeframe, the technical picture for Ethereum has completely changed in just a few days. Now Ethereum could begin a new uptrend. However, traders should base decisions primarily on the weekly chart, where Ethereum could head for $4,800, which is the upper band of the five-year sideways channel. On the daily chart, the nearest bearish FVG has been filled, but that FVG belongs to the previous trend. If it provokes a market reaction, it will most likely be corrective. After two deviations on the 4-hour timeframe, Ethereum has dropped to the lower band of the channel, from which liquidity could also be taken, thereby producing a buy signal. A similar signal has already formed for Bitcoin. In the coming days, a technical rise is possible with targets of $2,450 and $2,544.
CHOCH is a change of character / break of the trend structure. Liquidity means traders' Stop-Losses that market makers use to build their positions. FVG stands for a Fair Value Gap (area of price inefficiency). The price often moves quickly through such areas, indicating the absence of one side in the market. Later, the price tends to return and react to these zones. IFVG is an Inverted Fair Value Gap. After a return to such a zone, the price does not react but impulsively breaks through and then tests it from the other side.
OB means an Order Block. A candle on which a market maker opened a position in order to harvest liquidity and then form their own position in the opposite direction.
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