The cryptocurrency market sentiment has deteriorated today under the pressure of a strengthening US dollar and declining indices on Wall Street, where we are seeing a nearly 1.5% drop in S&P 500 futures and almost 2% declines in the Nasdaq 100 (US100). However, the biggest shock for the bulls has been the massive plunge in Ethereum’s price, which has fallen from around $3,200 last Friday to approximately $2,200 this morning. Although both BTC and ETH have recovered some of their losses, the overall sentiment remains very weak, with most smaller cryptocurrencies following Ethereum's lead and experiencing significant declines. The market fears that an escalating trade war could lead to a resurgence of inflation, which in turn could push the Federal Reserve to adopt a more hawkish stance, potentially harming the US economy.
Bitcoin and Ethereum ETF Inflows
Even positive ETFs net flows for both Ethereum and Bitcoin didn't stop the sell-off, triggered by short term holders liquidizations and long term holders profit taking.
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Bitcoin Inflows: Over the last two sessions of last week, nearly $700 million flowed into Bitcoin. However, this has not translated into a price increase. (Source: XTB Research, Bloomberg Finance L.P.)
Ethereum ETF Inflows: ETF inflows into Ethereum have been positive over the past three sessions. However, they have yet to come close to the success of Bitcoin ETFs. (Source: XTB Research, Bloomberg Finance L.P.)
Technical Analysis: Bitcoin & Ethereum (D1 Chart)
Bitcoin (BTC): The price dropped today to levels unseen since November but reacted at a significant support level. However, if weak stock market sentiment persists, another test of the 200-day EMA (similar to the one on August 1, 2024) cannot be ruled out. This could mean a drop to around $80,000. On the upside, the $100,000 level remains a key resistance.
(Source: xStation5)
Ethereum (ETH): Ethereum tested the $2,250 zone today, which is a crucial resistance level based on previous price reactions and the 71.6% Fibonacci retracement of the 2023 upward wave.
(Source: xStation5)
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