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Bitcoin and Ethereum continue to correct after sharp declines; however, demand remains quite low, so thoughts of a bullish trend are mere dreams for the near future. Many experts note that the market "bottom" might be formed in the $40,000 to $55,000 range, but in our opinion, even this area might not be the final stop. Many traders are accustomed to believing that Bitcoin will rise in price indefinitely, or they simply take a cue from Strategy. After all, it is hard to believe that a multi-billion dollar company doesn't understand what lies behind its strategy of perpetual buying of "digital gold." However, we believe that Bitcoin could freely fall to the levels of 2022. It is essential to remember that Bitcoin is neither physical gold nor a real asset backed by businesses or real estate. There are no technical signs of an end to the downtrend in Ethereum and Bitcoin.
In the meantime, experts continue to sound the alarm. Demand for Bitcoin ETFs has been declining for six consecutive weeks, with cumulative capital outflows exceeding $6 billion. If this were a one-time outflow, perhaps there would be no need to panic. However, we have formed a clear downward trend. Institutional capital continues to flow into technology company stocks, the AI sector, and stock indices. We believe that this fact best illustrates the large capital's belief in a bullish trend in the near future.
Let us also remind you that Bitcoin's current price is approximately $15,000 below its cost of mining. Many miners are forced to sell mined coins to cover their expenses. A certain portion of mining companies is reorienting to the AI sector. In our opinion, Bitcoin has become too expensive a tool. The higher the price of the tool, the less demand it has. The higher the price of the tool, the lower its potential for further growth. For instance, it is now extremely difficult to expect Bitcoin to grow by hundreds of percent, which was quite normal 5-10 years ago.
Bitcoin continues to form a full-fledged downward trend and a correction against it. We continue to expect a decline with a target of $57,500 (the 61.8% Fibonacci level from the three-year upward trend), and there are still no signs of the beginning of an upward trend. The last bearish FVG pattern formed in the $68,000 to $70,700 range, making this range the POI for short positions in the coming weeks. On the 4-hour timeframe, the cryptocurrency may enter a bullish correction soon, so if traders wish to trade against the trend, they can look for small long positions from bullish patterns. However, the correction may end at any moment.
The daily timeframe continues to show the formation of a downward trend that began in August of last year. The key selling pattern remains the bearish order block on the weekly timeframe. We do not believe the current downward trend is over, as there are no signs of it ending for either Bitcoin or Ethereum. In the near future, Ethereum may resume its decline, targeting $1,391 and $788 if Bitcoin reacts to the bearish FVG on the daily timeframe. Until that happens, small long positions can be considered on the 4-hour timeframe from bullish patterns. The market reacted to the last bullish FVG, but the growth is very weak. Traders should remember that a correction is just a correction; it is much better to trade with the trend.
CHOCH – trend structure break.
Liquidity – Stop Loss, pending orders that market makers use to build their positions.
FVG – Area of price inefficiency. Price moves through such areas very quickly, indicating a complete lack of one side in the market. Subsequently, the price tends to return and respond to such areas in continuation of the main trend.
IFVG – Inverted area of price inefficiency. After a return to such an area, the price does not respond to it but impulsively breaks through and then tests from the other side.
OB – Order Block. The candle on which the market maker opened a position to gather liquidity to form their own position in the opposite direction.
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