Bitcoin and Ethereum Are Trying to Recover Last Week’s Losses
The Bitcoin price is currently trading in a tight range between $19,500 and $18,000. It has fluctuated between the low and high of this range since it rejected the $20,000 mark. That has led to uncertainty and fear in the cryptocurrency sector. Meanwhile, according to data asset management institution Blofin, the number of contracts for the quarterly deliveries in September is still in the millions. Over 100,000 BTC options contracts and over 1.5 million ETH options contracts are due to expire on September 30. The potential impact of these contracts on the crypto market cannot be ignored.
BTC Forms A Bottom
Bitcoin is currently trading at around $19,180. Despite the volatility, it has gained 2% in the last 24 hours and 1% in the last week. The cryptocurrency traded close to a multi-year low at $18,000 as bears pushed it down.
The Bitcoin price fell massively after the US Federal Reserve raised interest rates last week. That led to selling pressure, pushing the cryptocurrency to its lowest level in over two years. With BTC’s price trending downward from an all-time high of $69,000, these levels have acted as critical support. In the wake of increasing selling pressure, Bitcoin has stayed around these critical levels.
According to Justin Bennett, an analyst, Bitcoin’s price action is re-creating a channel formed during the cryptocurrency’s recovery from a massive crash in early 2022. During this period, the Bitcoin price was trading between $37,500 and $49,500.
For several months, Bitcoin was trading in a sideways channel. However, the price of cryptocurrency started falling due to macroeconomic developments which led to another crash in May 2022.
According to Bennett, Bitcoin’s price could be forming a channel similar to the previous crash after it hit the bottom of the pattern in late June. He believes the cryptocurrency could test the $26,000 mark before crashing to the $18,000 level.
Ethereum’s Price Might Fall Even Further
Despite experiencing a significant decline this month, Ethereum’s price has not yet responded to the bear attack. The steep decline that started on September 10 prevented any V-shaped reversal attempts. That has created a new negative sentiment surrounding the proposed merger between Ethereum and blockchain technology.
As of writing, the Ethereum price is trading at $1,331, with the bulls trying to establish a floor above the 200-week simple moving average. The rising trend line and the bullish signal on the daily chart suggest that the market may be in for a bounce. However, it is still too risky to enter the market due to the lack of daily closes above the eight-day exponential moving average.
Although the previous rally was expected to trigger a significant increase in the volume during the mid-June liquidations, it did not follow through. Ethereum could fall back to the June 18 swing lows and invalidate the bearish knife scenario. Invalidation of this scenario would allow the market to break the September 11 swing high at around $1789.
Rally in Bitcoin Price Supported By Macroeconomics
Tom Dunleavy, a Senior Analyst at Messari, noted that the rise in interest rates could boost the crypto market. In addition, he said that the correlation between various asset classes, such as stocks and Bitcoin, has increased.
According to Dunleavy, the sentiment in financial markets is starting to reach levels not seen since the COVID-19 pandemic in 2020. That is an indication that the market is in a bear market. The Put/Call Ratio, which measures the number of options contracts bought versus sold, is at 1. It could indicate a high level of pessimism in global markets.
The last time the Put/Call Ratio reached its current level was during the bull run in the crypto and Bitcoin markets, which lasted for several years. Despite the current macroeconomic scenario, Bennett noted that the momentum could push the price to $26,000.
