Double Threat: Bitcoin And Ethereum, Start Of Bear Market Or Bullish Consolidation?

Bitcoin and Ethereum have been moving sideways during today’s trading session. The top two cryptocurrencies were on their way to previous highs but were rejected near-critical resistance levels.

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At the time of writing, Bitcoin trades at $36,943 with a 0.9% loss while Ethereum trades at $2,642 with a 0.7% loss in the last 24-hours, respectively. The general sentiment in the market has been shifting quickly with every move to either direction suggesting there is a lot of uncertainty in the market.

BTC rangebound between $30K and $60K in the daily chart. Source: BTCUSD Tradingview

In a recent report published by Bloomberg Intelligence’s Mike McGlone, Bitcoin and Ethereum are presented as a super combo that could boost the dominance of the dollar in the economy of the future. However, the short term seems poised for some more downside.

Due to the bearish trend that has extended from Q4, 2021 into early 2022 with Bitcoin and Ethereum approaching last year’s lows. For Ethereum, McGlone believes ETH’s price could see $1,700 once again.

At that time, the market presented an excess in leverage positions which left it vulnerable to a subsequent liquidation cascade. Once the futures market was purged of over-leveraged positions, Ethereum and Bitcoin were able to reach new all-time highs. In that sense, McGlone said:

Ethereum approaching the lower end of its range has greater risks for shorts than longs.

Source: Bloomberg Intelligence via Mike McGlone

For Bitcoin, the scenario could be similar with $30,000s holding as critical support as it did back in 2021. If BTC’s price remains rangebound between these levels and $60,000, as the expert noted, a lot of traders could be “disappointed”.

Most people expect Bitcoin and Ethereum to trend lower, even lower than during May and July last year, due to the shift in monetary policy from the U.S. Federal Reserve. However, this change could be already priced in, as NewsBTC reported.

Bitcoin And Ethereum With Bullish Fundamentals

Despite macro-economic pressures, Bitcoin and Ethereum maintain their strong fundamentals. Mainly, the expert supports its bullish thesis on these digital assets increasing demand versus their diminishing supplies. In that sense, McGlone noted:

Our graphic shows this consolidation period may be ending, with the path of least resistance pointing higher. About 30% below the 52-week moving average has proven to be a good support reading. Bitcoin revisited this potential bottom in January for the first time since the 2020 trough.

For Ethereum, the introduction of EIP-1559 and its burning mechanism could contribute to potential future appreciation as it becomes a scarcer asset. Although “less defined” than Bitcoin’s supply, ETH’s is in a downward trend.

Related Reading | TA: Ethereum Below This Support Could Spark Another Sharp Decline

These assets are still in their early days, despite the news of many big institutions integrating them into their business/investment strategies. Therefore, there is still have a lot of room to come out on top, especially in the current macro environment.

Source: Bloomberg Intelligence via Mike McGlone