Ethereum remains under pressure as the dollar strengthens

  • The US dollar strengthened following the FOMC September meeting
  • The Fed sees the funds rate higher for longer
  • Ethereum should hold above $1,400 for the bullish bias to persist

This year had two distinct parts for financial market participants – one characterized by the dollar’s weakness and one dominated by the dollar’s strength. 

The US dollar runs the show both in the traditional and cryptocurrency markets. EUR/USD is the best example of the correlation between the two markets. 

It opened the year at 1.06, rallied to 1.12, where it peaked during the summer, and then gave up its gains. The same dollar cycle may be seen in many cryptocurrencies. 

For example, Ethereum rallied from the start of the trading year, peaked at $2,000, where it met resistance, and then corrected. Therefore, cryptocurrency traders may want to focus on the dollar’s direction in order to position on the right side of the cryptocurrency market. 

The Federal Reserve’s September meeting did not change the dollar’s course

On Wednesday, the United States Federal Reserve released its monetary policy decision. It chose to keep the funds rate unchanged as the latest inflation news is encouraging. 

Market participants wildly expected the decision, so the focus shifted to the press conference. Jerome Powell was hawkish during the conference in the sense that it kept all the options on the table, including further rate hikes. The hawkish part was that he implied that future rate cuts may not be as many as in the past. In other words, interest rates would remain higher for longer. 

Naturally, the dollar rallied. 

Ethereum is trapped in a tight range

Ethereum is one of the most popular cryptocurrencies. Also, it is very liquid compared to other cryptocurrencies. 

Before the rally that started in 2023, Ethereum formed a contracting triangle. The good news is that such triangles appear at the end of complex corrections. 

Ethereum chart by TradingView

It means that if they act as reversal patterns, as is the case here, the new move that follows is part of a different pattern. 

The chart above shows that Ethereum corrected 50% from its highs but remains in a relatively tight range. By tight, one should refer to the historically high volatility in the cryptocurrency market. 

Bulls may want to wait for Ethereum to close above $2,000 before going long. Also, they would want to see Ethereum holding above the $1,400 support area. 

On the other hand, bears may want to see the market dropping below the support area provided by the $1,400 level. A drop to $1,000 might be in the cards on such a move. 

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Bitcoin bounces from support ahead of the Fed’s decision

  • Bitcoin found support at $25k (again)
  • YTD performance remains impressive
  • A dovish Fed may trigger even more strength

Cryptocurrency investors may have been disappointed by the lack of volatility during the summer months—after all, Bitcoin, the leading cryptocurrency, only consolidated levels. 

But one should keep in mind that Bitcoin rallied strongly in 2023. It returned over 61% in the trading year, and the bias remains bullish. 

The bullish perspective is even more obvious if one looks at the yearly returns of Bitcoin. Since 2010, only in three years did Bitcoin deliver negative returns. 

Buying the dip seems to have worked every time, even though the dips were quite scary. 

Will the Fed’s decision boost Bitcoin?

Tomorrow, the Federal Reserve of the United States (Fed) is expected to hold the funds rate steady. As always, the details in the FOMC Statement and the press conference will move markets. 

Higher inflation than the Fed’s target was the main cause of rising interest rates. Now that inflation comes down from its highest levels, the Fed may feel comfortable that it will reach the target in a timely manner. 

Therefore, a dovish Fed would trigger weakness in the US dollar and strength for Bitcoin. 

The technical picture also favors more Bitcoin strength. The market bounced twice from $25k and now trades above $27k. A dovish Fed would send Bitcoin back to the $30k resistance area with big chances to move even higher. 

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Bitcoin trades with a bullish bias ahead of the US inflation data

  • Financial market participants await the US inflation data
  • Bitcoin shows signs of a possible reversal
  • A falling wedge and a bullish divergence support the case for higher Bitcoin prices

Today is important for anyone interested in financial markets and US data. Because the US economy is the largest in the world and the US dollar is the world’s reserve currency, monetary policy is the main driver of financial markets’ volatility.

Volatility, or the lack of it, is the one that upsets cryptocurrency traders. Bitcoin went nowhere since it traded above $30k in April, as every rally was sold.

But a close look at the traditional currency market reveals that most fiat currencies have traded similarly against the US dollar. Therefore, if anything is going to push the cryptocurrency market’s volatility up, it is going to be the US dollar.

Core CPI expected at 0.2% in August

Today’s release in the United States is expected to show that the Core CPI in August has increased by 0.2% m/m while the headline inflation is set to rise to 0.6% m/m from the previous 0.2%.

But the bias is that inflation will surprise to the downside.

If that is the case, the bets will increase the Fed will hold rates steady and perhaps, it will be enough to convince market participants that there will be no rate hike anymore and that the Fed has already reached the terminal rate.

A bullish divergence supports the case for higher Bitcoin prices

The summer months brought broad US dollar strength across financial markets. EUR/USD dropped from above 1.12 to below 1.07. At the same time, Bitcoin declined from $32k to $25k as investors bought the US dollar.

Bitcoin chart by TradingView

However, recent price action suggests that there is scope for optimism. First, the market formed a bullish divergence with the RSI. Second, a falling wedge pattern suggests that a reversal might be in the cards.

All in all, we will all find out where Bitcoin goes next sooner rather than later. Now that the lull summer trading is gone, expect the market’s volatility to pick up as important economic data is due.

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As the US dollar’s strength persists, Bitcoin remains trapped in tight ranges

  • Bitcoin has moved in tight ranges since it broke above $30k in 2023
  • Market participants await key economic events in September
  • All eyes are on the Fed and its monetary policy decision 

Bitcoin investors probably have lost their patience during the summer months, as the cryptocurrency did not move. Known for its high volatility levels, Bitcoin is simply consolidating current levels. 

Make no mistake, the start of the year was a promising one. After all, Bitcoin rallied from 16k to $32k, doubling in price. 

But since it traded above $30k for the first time this year, it began a consolidation that currently lasts for more than five months. Moreover, the ranges become tighter and tighter, making it difficult to swing trade. Speculators, therefore, must scalp or wait for the market to move first and act second. 

Bitcoin chart by TradingView

Financial markets await key events in September

Most likely, financial markets (and the cryptocurrency market) do not move because market participants await key events due in September. 

More precisely, they await the Federal Reserve of the United States September decision and the US CPI data for August. Both events will increase volatility for the US dollar, so Bitcoin might finally break the range it held during the summer. 

The latest inflation data showed that the prices of goods and services in the United States have come down nicely. Sure enough, inflation is way above the Fed’s 2% target. 

Nevertheless, the disinflationary process suggests that inflation has peaked and what remains is to give the interest rate hikes time to make their way through the economy. 

Therefore, the Fed’s focus might not be on inflation anymore but on job creation – the other part of its dual mandate. As such, if the current inflation trend remains unchanged, the Fed might not see the need to raise the funds rate again. 

It means the US dollar might weaken in September if the Fed does not pause and delivers a dovish message. Bitcoin may resume its bullish 2023 trend if that is the case. 

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Falling US Treasury returns might help the cryptocurrency market

  • US deficits keep rising despite the economy growing
  • US Treasury returns dropped for the past three years in a row
  • A weakening dollar might cause cryptocurrencies’ next step higher

In previous articles published here, I’ve argued that the next move in the cryptocurrency market will likely be driven by the US dollar rather than crypto-related news. Given the current interest rate levels, the surging deficit makes raising money difficult for the US government.

Hence, one way to make it easier is to lower the rates.

The Federal Reserve will never tell market participants that rates cannot move much higher. The moment it does that, inflation expectations are not anchored anymore.

However, one might take time to understand what the bond market tells. For the first time in the history of the United States, US Treasury returns dropped three years in a row.

A vicious circle could spark the US dollar’s weakness

The price of a bond is inversely related to its yield. Lower bond prices mean higher yields and one way for bond prices to bounce back is for yields (i.e., interest rates) to decline.

But the deficit poses a huge problem. Deficit spending is one of the reasons why bonds underperform.

Because deficits surged even as the economy grew, more bonds are issued to pay for it. However, issuing more bonds means issuing more debt, but interest rates are not low anymore as they were in the past years.

Therefore, interest rate expenses would increase, offsetting the revenue collected from selling the bonds.

One way to solve this problem is to let the dollar slip. The starting point might be a signal that the Fed has already reached the terminal rate.

If the dollar starts weakening, its decline should be generalized and also have ramifications for the cryptocurrency market. Therefore, if Bitcoin is about to make a move higher, one should keep an eye on the US deficit and the dollar.

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Is it the right time for Bitcoin to jump above $30k again?

  • Bitcoin and EUR/USD have a direct correlation
  • If EUR/USD makes a new high for the year, Bitcoin should follow
  • Elliott Waves points to a move back above 1.10 for EUR/USD

It has been a struggling summer for Bitcoin investors as the US dollar strengthened. After trading above $30k in mid-April, Bitcoin failed at the highs just as the dollar’s strength started.

The easiest way to interpret Bitcoin’s price action is to look at the EUR/USD. When Bitcoin traded above $30k in mid-April, EUR/USD reached above 1.10 after an impressive rally from below 0.96.

Then, the EUR/USD corrected to the 1.06 area, and Bitcoin followed the same path as it dropped to $25k. Next, EUR/USD made a new high and traded above 1.12, a move that Bitcoin quickly copied as it made another high for the year.

It is, therefore, safe to assume that for Bitcoin to reverse the recent bearish trend, we should see the EUR/USD bounce from the current levels and trade above 1.12 again. More precisely, the dollar’s strength should end for Bitcoin to reverse course.

EURUSD chart by TradingView

Elliott Waves suggests EUR/USD should trade above 1.10 again

Looking at the EUR/USD rally from the 2022 lows through the lens of the Elliott Waves theory, it becomes evident that the market completed a five-wave structure when it reached 1.12.

Everything fits – the extension, the channeling, and even the retracement from the highs, completed in the right time needed to validate the pattern.

It means that EUR/USD weakness seen during the summer months is part of a corrective phase. Once ended, the correction should be completely retraced.

Therefore, all eyes are on the 1.10 pivotal level. By regaining the level, EUR/USD should also put a bid under Bitcoin, should the correlation mentioned earlier remain valid.

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LTC/BTC bearish trend continues, as Bitcoin outperforms

  • LTC/BTC has been in a bearish trend for the last five years
  • Bitcoin’s outperformance is likely to continue
  • A descending triangle keeps the bearish bias intact

One of the most interesting markets to trade are cross pairs. Crosses are less liquid than major pairs and often move in tight ranges. This is a general rule for the classic currency market but also valid for cryptocurrency.

LTC/BTC is such a cross. It moves based on the differences in the prices of Litecoin and Bitcoin.

Since 2018, the market has been in a bearish trend. It means that Bitcoin has quite outperformed Litecoin in the past five years.

Litecoin chart by TradingView

The chart above shows that the cross formed a series of lower highs and lower lows – characteristic in bearish triangles. Also, the bearish bias remains strong due to the presence of a descending triangle.

A descending triangle is a bearish continuation pattern. Its measured move equals the size of the longest segment of the triangle, projected from the horizontal base.

Therefore, traders may want to wait for the triangle to break lower before shorting the cross with a stop at the previous lower high.

What moves a cross?

Other rates influence a cross pair’s movements. In this case, the LTC/BTC cross pair reflects the differences between the LTC/USD and BTC/USD pairs.

Because the cross is in a bearish trend, Bitcoin outperformed Litecoin in the last five years. In other words, it means that Bitcoin was a better investment than Litecoin. Given the bearish bias for the cross, Bitcoin’s outperformance should continue.

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Key US data to move the cryptocurrency market this week

  • The US dollar is at an inflection point
  • Core PCE data today is key
  • The NFP report might miss expectations

Today marks the last trading day of the month. As usual, it means that volatility in financial markets will increase, especially during the London and North American sessions.

The US dollar’s volatility was a main driver for the cryptocurrency market this year. For instance, the dollar weakened since last October, as reflected by the EUR/USD bouncing from 0.95 and rallying to 1.12. At the same time, Bitcoin rallied too.

But as the EUR/USD could not hold above 1.12, nor did Bitcoin and other cryptocurrencies hold at their 2023 highs. In some cases, some cryptocurrencies reversed all of their gains against the dollar – and some more.

Therefore, it is clear that what happens with the US dollar also moves the cryptocurrency market. This week, despite having just two trading sessions left, the US dollar might move aggressively on two pieces of economic data:

  • Core PCE Price Index m/m
  • August NFP report

Core PCE Price Index

The PCE data is the Fed’s favorite way of interpreting inflation. It shows the change in the price of goods and services purchased by consumers but leaves out food and energy prices. The data will be released later today in the North American session.

The market expects it at 0.2% MoM, but the risk is that it will be lower. Jerome Powell, the Fed Chair, stated at the Jackson Hole this August that he believes inflation has peaked. If that is the case and the PCE data confirms it, the dollar might take a hit.

August NFP report

The second part of the Fed’s mandate deals with job creation. For the Fed to stop hiking the funds rate, it must see a softening labor market.

So far this week, both the JOLTS report and the private employment have disappointed. Therefore, the bias is that the NFP report will also come on the soft side. In such a case, the dollar’s weakness should accelerate.

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DOT/USD price forecast: A descending triangle keeps bulls at bay

  • DOT/USD is in a triangular consolidation
  • The bias remains bearish
  • Conservative traders might want to wait for the market to move first

There is nothing positive in the DOT/USD chart for bulls. The price action remains constrained by a triangular pattern that formed in the last twelve months.

Sure enough, the triangle may break in either direction. But the bias is bearish while Polkadot’s price action holds inside the pattern.

Polkadot’s price collapsed after the triple failure at the $50 area. The dollar’s strength was one reason, but surely some other factors contributed to the selloff.

Not even the renewed optimism in the cryptocurrency market that was seen in 2023 was enough. After a small bounce, Polkadot gave away all of its 2023 gains as the market was (and still is) unable to break the lower highs series. At the same time, it pushes for another lower low – a bearish development.

Polkadot chart by TradingView

The bullish case for Polkadot

The only way to construct a bullish case for Polkadot is to wait for the market to move first simply. For a “proof of life,” if you want.

Such proof that the market turned bullish will appear only if the price moves above $8. And, if it holds there.

It would mean that the previous lower high is broken, and the bias turned bullish. Until such a move is seen on the daily chart, buying DOT/USD is risky.

The bearish case for Polkadot

It is easier to build a bearish case because of the descending triangle mentioned earlier. If the market makes a new lower low, the triangle’s measured move points to a drop toward the $1 area.

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Polygon price forecast: Will it hold above $0.5?

  • Polygon erased all of its 2023 gains
  • The technical picture is bearish
  • Only a move above parity will change the bearish bias

What a ride it has been for Polygon investors. Since its inception, the cryptocurrency rallied strongly, only for the move to be faded.

Twice, it had tried at the $2.8 area, failing both times. The market has put a double top pattern there, as it was unable to break above the horizontal resistance area.

Following the double top, it all went wrong for Polygon investors. Another bearish pattern formed, a descending triangle, with a scary measured move for those that bought at the top.

The measured move sent the market all the way down to $ 0.4 before bouncing in the last part of 2022.

When cryptocurrencies rallied at the start of 2023 on the back of Bitcoin’s move higher, optimism emerged again. Polygon rallied, too, trading above $1.4, but those gains are long gone. However, Bitcoin still holds on most of its 2023 gains, which spells trouble for Polygon investors.

Polygon chart by TradingView

Polygon remains bearish while below $1

For the bearish bias to end, the market needs two things. First, it must break the bearish trendline on the chart above. Ideally, it should also break the series of lower highs.

Second, it must trade above parity with the dollar. That is a pivotal level; holding there builds energy for further advances.

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Dogecoin finds buyers at $0.06, focus shifts to the $0.08 area

  • Dogecoin remains bearish while below $0.08
  • A move above would invalidate the lower highs series
  • A weak US dollar might matter more for Dogecoin than anything else

Not much is happening in the cryptocurrency market lately. Traders used to high volatility levels were disappointed lately.

For example, Dogecoin has been in consolidation for more than twelve months. Sure enough, the market bounced several times but only found resistance at the $0.1 level.

Having said that, it does not mean that Dogecoin cannot bounce from these depressed levels. As long as the market holds above $0.06, bulls will try to overcome $0.1. But the critical level to overcome first is $0.08.

By breaking and holding above, the market would invalidate the lower highs series. Therefore, the bias would then shift from bearish to bullish.

Dogecoin chart by TradingView

What can drive Dogecoin higher?

Like it or not, cryptocurrency traders must recognize that volatility is not what it used to be in the crypto market. Sure enough, rallies or selloffs have a larger magnitude than in the traditional currency market, but nevertheless, the amplitude of market movements is not the same anymore.

It can only mean that the cryptocurrency market aligns with the traditional currency market in terms of what drives volatility. Hence,  it is only logical to look at the US dollar and where it might go next.

Recent labor market data suggests that the August NFP report will disappoint. If that is the case, expect the US dollar to continue its downward trend that started yesterday after the disappointing JOLTS report.

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Bitcoin jumps on Grayscale news, but what happens with the USD is more important

  • Grayscale won a landmark ruling against US regulators
  • The SEC was wrong to reject Grayscale’s application to transform the Bitcoin trust into an ETF
  • Bitcoin’s price jumped, but it is more relevant what happens to the US dollar next

Grayscale is a leading crypto asset manager. It enables traders and investors to gain exposure to the cryptocurrency market through a Bitcoin trust.

The trust now has over $17 billion in assets under management, and the eligible shares of Grayscale Bitcoin Trust are quoted on OTCQX under the symbol GBTC.

Yesterday, Grayscale won a landmark decision from a US court that ruled against the Securities and Exchange Commission over Grayscale’s Bitcoin ETF.

Grayscale wants to convert the Grayscale Bitcoin Trust into an ETF (Exchange Traded Fund), but the SEC did not allow it. However, the federal court ruled that the SEC was wrong.

As a result, Bitcoin price jumped above $27k. While Grayscale’s news is positive for the industry, for Bitcoin, it is more relevant what happens to the US dollar.

Bitcoin chart by TradingView

Bitcoin bounces from support as the US dollar weakens

At the same time, when the US federal court ruled in favor of Grayscale, news came out that the labor market in the United States softened. Major stock market indices advanced as the dollar lost ground.

This is a trend to watch in the future.

Because the Fed is convinced that inflation has peaked, the focus sits now on the labor market. If jobs data this week confirms the soft path, expect Bitcoin to gain some more.

From a technical standpoint, Bitcoin bounced from horizontal support given by the neckline of an inversed head and shoulders pattern. The neckline is often retested, and now the focus shifts (again) to the measured move that points to $35k and beyond.

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Ripple back under pressure, bears eye major support area

  • Ripple erased all the gains following the July federal court ruling
  • Dynamic resistance held
  • All eyes are now on the major support area seen at $0.3

Crypto investors cheered Ripple’s price reaction in July following news that the XRP token is not a security when sold to the general public. The price spiked from the $0.4 area to close to $1, and finding a single bearish trader following the news was impossible.

But markets often mislead traders.

As it turns out, the SEC (Security and Exchange Commission) wants to appeal the federal court ruling in Ripple’s case. Investors did not wait and sold, sending the XRP/USD rate back to where it was before the July news.

The round trip was completed recently when Ripple fully retraced the move following July’s announcement.

One can build both a bullish and a bearish case for Ripple by looking at the technical picture. But the main thing is that Ripple is back in the range, unable so far to break above or below major resistance and support areas.

Ripple chart by TradingView

The bullish case for Ripple

In 2021, Ripple’s price surged to over $1.8 as investors hurried to get exposure to the cryptocurrency market during the COVID-19 pandemic. But sellers quickly emerged, and a bearish triangle formed.

The triangular consolidation held until 2022. In the first half of that year, Ripple’s price broke lower. It did so by breaking support given by the lower edge of the triangle, and since then, it has not looked back.

Until this July.

Previous support turned out to be dynamic resistance. It is this resistance that kept bulls at bay following the July news.

However, despite the rejection, one can build a bullish case for Ripple. The $0.3 area acted as a major support in 2022, and the market has built a series of higher highs and higher lows ever since. As long as it holds above support, Ripple’s price might recover and attempt to break and hold above dynamic resistance again.

The bearish case for Ripple

On the other hand, the recent selloff alone has scared many traders. Optimism vaned, and with it, capital fled, too. If Ripple’s price drops below $0.4, the momentum then builds for further downside toward the major support area seen at $0.3. A break there, and it is game over for bulls that were so sure that Ripple’s time has come.

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Bitcoin price tumbled last week on SpaceX liquidating stash

  • SpaceX’s Bitcoin liquidation triggered a massive drop in Bitcoin’s price
  • A double top pattern suggests more weakness might come
  • The measured move hints at further downside into the $20k area

Bitcoin price failed at the $30k level twice this year. After rallying from $16k, it formed a possible double top pattern that should worry investors.

The latest sign of weakness came last week. News that Elon Musk’s SpaceX liquidated its entire Bitcoin stash sent the price lower. More precisely, SpaceX sold Bitcoin worth $373 million.

It was one of the largest daily liquidations by volume in history. In just 20 minutes, Bitcoin price crashed by more than 7% on outflows bigger than during the FTX collapse.

SpaceX sold its Bitcoin holdings after Tesla did the same last year. More precisely, Tesla sold last year 75% of its Bitcoin holdings.

So what does it mean for Bitcoin price, and can the market bounce back?

A double top pattern might have formed at $30k

Since the start of the year, Bitcoin price have doubled. The rally was so powerful that it triggered a wave of enthusiasm among cryptocurrency investors.

But the failure to hold above $ 30k led to the formation of a possible double top pattern.

Bitcoin chart by TradingView

A double top is a reversal pattern with a measured move equal to the distance from the top to the neckline, projected from the neckline. The chart above shows the two tops formed at the $30k area and the neckline at the $25k area.

Therefore, the measured move equals $5k and, if projected from the neckline, suggests that Bitcoin might see $20k sooner rather than later.

The only way for bulls to get back in control is for Bitcoin to break above the double top area (i.e., $30k). For now, however, the bias is bearish, and the focus is on a potential bearish breakout below the neckline.

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2 technical reasons to buy Bitcoin (or sell the US dollar)

  • RSI stays above 50 in 2023
  • The weekly chart points out an ascending triangle pattern
  • $45k is the next target, providing the Bitcoin price holds above $25k

Bitcoin bulls must be frustrated by the slow price action in the last few months. After all, ever since it met resistance at the $30k level, Bitcoin moved in a very tight range compared to historical volatility. 

But the same happened to the FX market. Volatility remains subdued since the EUR/USD climbed over the pivotal 1.10 level, and now traders wonder what comes next – further upside or a reversal of the bullish trend. 

The two are connected. 

If one looks at the EUR/USD rally from 0.95 and compares it to the Bitcoin rally from $15,000, similarities can’t be ignored. In other words, it is more of a US dollar’s story than Bitcoin investors accumulating more coins. 

Faced with this ambiguity, sometimes it helps to look at the bigger picture and interpret charts. In doing so, the bias for Bitcoin price is bullish. 

So here are two technical reasons to buy Bitcoin (or sell the US dollar): 

  • RSI stays above 50 in 2023
  • The weekly chart points out an ascending triangle pattern

Bitcoin chart by TradingView

RSI holds above 50 in 2023

The first technical bullish setup for Bitcoin comes from the Relative Strength Index (RSI). The RSI is an oscillator, typically displayed at the bottom of a chart. 

The main theme of the weekly chart above is Bitcoin’s rally from the 2022 lows. The move from $15k to above $30k resulted in the RSI crossing above 50. 

The RSI “oscillates” between overbought and oversold levels, marked with 70, respectively 30. When in-between levels, technical traders focus on the 50 mark. More precisely, when the RSI crosses above 50, the price action is bullish, and when it crosses below, the price action is bearish. Of course, traders should be aware of false breakouts. 

But the timeframe above (i.e., weekly) suggests no such thing as a false breakout. Just the opposite, considering that the price action has held above 50 since the start of 2023. 

Hence, the bias remains bullish while the RSI holds above 50, and the next move should be a climb into the overbought territory. 

An ascending triangle pattern hints at a move above $45k

An ascending triangle is a bullish pattern characterized by the price action pushing against horizontal resistance. Its measured move equals the longest segment in the triangle formation and points to further advances toward the $45k area. 

However, there is one condition – the price action must hold above $25k. If it does so, the RSI will stay above 50, meaning Bitcoin’s price will finally build energy to break above horizontal resistance. 

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Should you own Bitcoin, given the growing adoption of digital currencies?

  • Cryptocurrencies keep growing in popularity
  • Bitcoin’s price dynamics changed with institutional investors’ adoption
  • Bitcoin is now correlated with assets in the traditional financial market

Since digital currencies exist, the industry evolved exponentially in a little more than a decade. Currently, more than 22,000 cryptocurrencies are part of one of the most dynamic markets in the world. 

The huge number of currencies brings a few challenges to traders and investors. First, crypto exchanges find it difficult to list all cryptocurrencies; thus, investors may miss some opportunities. 

Second, many projects in the crypto space failed. Statistics say that nine in ten blockchain projects will fail. 

For example, in 2023 alone, 83 coins disappeared for various reasons, such as failing ICO, no purpose, scams, or they had no volume. 

Therefore, to avoid being caught in projects doomed to fail or to be scammed, many investors prefer cryptocurrencies with a large market capitalization and well-established in the investing community. In other words, if a cryptocurrency becomes part of institutional investors’ portfolios, the chances are that it will still exist in the medium and long term. 

Bitcoin is such a digital currency. 

Bitcoin’s dynamics changed with the growing adoption of digital currencies

As the investing community embraced digital currencies, Bitcoin became part of more and more institutional investors’ portfolios. 

But the adoption came with some costs. 

Bitcoin chart by TradingView

Take the chart above. It shows Bitcoin’s price evolution since its inception. 

When it first traded above $1,000, Bitcoin caught everyone’s attention. Then, when it reached $20,000 for the first time, everyone talked about a bubble. 

So strong was the resistance level that it took Bitcoin a few years to overcome it. Respecting the interchangeability principle, resistance has become support recently. 

But such ample moves are unlikely to be seen in the future. Because Bitcoin’s correlation to traditional financial markets increased, it is unlikely for the price to triple or double without similar moves elsewhere. 

Summing up, Bitcoin may be a good investment for the long term, but the rising adoption of cryptocurrencies will make it more and more difficult for the price to move the way it did before. 

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ETH/USD unable to break $2000 despite a bearish July NFP report

  • The July NFP report was more bearish than bullish for the US dollar
  • Ethereum keeps failing at  $2,000, but the series of higher lows remains intact
  • Only a break below $1,300 would invalidate the bullish setup 

Market participants view the July NFP report released last Friday as neutral. On expectations of 205k new jobs in July, the US economy delivered 187k – an impressive number, close to the estimate. 

Moreover, the unemployment rate declined to 3.5% from 3.6%, indicating that the labor market remains resilient. 

However, details in the report do not offer such an optimistic perspective. For example, most jobs were created in three sectors alone (government, health, and education). Also, the AHE (Average  Hourly Earnings) increased MoM, suggesting that the Fed’s fight against inflation is far from over. 

Furthermore, the previous NFP number was revised down – again. This was the sixth consecutive month when the jobs number was revised down. 

Therefore,  the July NFP report was more bearish than bullish for the US dollar. Yet, the markets did not react on Friday but might do so in the week ahead. 

Ethereum chart by TradingView

Unless ETH/USD breaks below $1,300 the bullish bias continues

The technical picture looks bullish despite Ethereum being in a consolidation area for the last twelve months. More precisely, it looks like the market builds energy to break higher. 

Therefore, the path of least resistance is to break above $2,000. 

However, the market needs to keep the series of higher lows intact to remain bullish. In other words, the bullish bias would quickly turn bearish if the ETH/USD price drops below $1,300. Until then, expect bulls to keep bidding for a break above the $2,000 resistance level. 

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Should you buy or sell Bitcoin ahead of the July NFP report?

  • The July NFP report is due today, and the US dollar’s volatility is set to increase
  • Bitcoin holds close to its yearly highs
  • The bias for Bitcoin remains bullish while the market holds above the rising trendline 

The Non-Farm Payrolls (NFP) report is released on the first Friday of each month. It shows the change in the number of workers in the US economy – the largest economy in the world. 

Because of that, the economic report directly impacts financial markets. The dollar fluctuates widely on the NFP report’s release, and even the cryptocurrency market participants are interested in trading the report. 

Bitcoin’s correlation with the dollar’s strength or weakness increased since more institutional investors included Bitcoin in their portfolios. This year, the dollar declined, as reflected by the EUR/USD exchange rate that reached a new high for the year less than two weeks ago. 

Therefore, it is unsurprising that Bitcoin holds close to its yearly highs ahead of the July NFP report. Also, the bias remains bias as Bitcoin holds above the upward trendline that marks the 2023 bullish trend. 

Bitcoin chart by TradingView

The bias remains bullish while Bitcoin holds above the rising trendline

The technical picture favors more upside for Bitcoin for at least three reasons. 

First, since the 2022 lows, Bitcoin formed a series of higher highs and higher lows. Such formation is typical in bullish trends, and while in place, the bias remains bullish. 

Second, one can properly identify the bullish trend by connecting the lower highs. Bulls will keep buying the dips as long as the price action holds above it. 

Third, a possible bullish flag, marked in blue on the chart above, has a target of $35k for Bitcoin, as indicated by its measured move. 

Therefore, today’s NFP report can be the one to make or break the trend. On a better-than-expected report, Bitcoin might test the trendline as the dollar should strengthen. On the other hand, if the US economy added fewer jobs in July than the market expects, Bitcoin might go for the bullish flag’s measured move in the days to come. 

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BNB/USD vulnerable as a bearish flag formation points to a move below $200

  • BNB/USD forms a possible bearish flag pattern
  • The US dollar strength is not responsible for the BNB/USD bearishness
  • $200 provides support for now

Bitcoin rallied in 2023 and holds onto its gains. Most other major cryptocurrencies did so too, but some exceptions exist. 

One is Binance Coin (BNB). 

Sure enough, it rallied at the start of the year, following Bitcoin’s lead. But then it gave up all of its gains – and some more. 

One cannot blame the US dollar’s strength as the cause for the BNB/USD decline. After all, the dollar’s strength is not visible in other cryptocurrencies. 

Instead, it appears to be the Binance Coin that trades with a bearish tone. That is particularly true if one looks at the technical picture, which shows the bearish pressure building as the market nears the $200 support level. 

Binance Coin chart by TradingView

A bearish flag pattern suggests that BNB/USD will break the $200 support level

A bearish flag pattern is a continuation pattern forming in a downtrend. The consolidation area follows a steep decline, and the breakout or the measured move equals the distance that the market traveled prior to the consolidation. 

If, indeed, BNB/USD formed a bearish flag pattern, then the support in the $200 area should give way. The pattern’s measured move, seen in orange above, points to $150 and lower. 

What should worry investors is the inability of the market to bounce while other cryptocurrencies hold near their yearly highs. It points to other factors weighing on the market, different than the US dollar’s strength. 

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ETH/USD price forecast as July comes to an end

  • Ethereum is consolidating around the yearly highs
  • $2,000 proves to be stiff resistance
  • ETH/USD price action holds between a $1,000 range since May 2022

There is only one trading day left in July, and the cryptocurrency market is consolidating. That is particularly true of major cryptocurrencies such as Bitcoin or Ethereum, as they both hover around their yearly highs against the US dollar. 

Ethereum found strong resistance at the $2,000 area in 2023, just as it found strong support at $1,000 last year. The question now is whether resistance holds and the price will be sent back to $1,000? Or will bulls manage to push over resistance, and the rally will continue in the last months of the year? 

ETH/USD remains bullish while the price holds above $1,000

The rally in the cryptocurrency market seen in 2023 triggered enthusiasm among cryptocurrency investors. However, without more follow-through, the bullish sentiment will dissipate soon. 

Ethereum chart by TradingView

A quick look at the chart above reveals a $1,000 range since May 2022. More precisely, the market moved between $1,000 and $2,000, clearly with an upside bias but failing to make a meaningful break higher. 

Since touching the $1,000 support level in 2022, ETH/USD started a series of higher highs and higher lows, typical in bullish formations. Because the higher lows formed against horizontal resistance, it looks like the market builds energy to break higher. However, the bullish bias should hold only if the price does not break the higher lows series. 

If it does, the focus suddenly turns to the $1,000. A clear break there brings back the previous head and shoulders pattern with a measured move much lower than $1,000. 

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3 economic events to move the cryptocurrency market next week

  • Key US economic data is due this week
  • An increase in the US dollar’s volatility should move the cryptocurrency market too
  • The NFP report is the highlight of the week

The final week of July is ahead of us, and cryptocurrency traders might want to consider what happens with the US dollar. After all, Bitcoin’s consolidation around $30k in the past few weeks brought little or no activity in the market. 

Therefore, should the US dollar’s volatility rise in the week ahead, Bitcoin’s volatility may rise too. Consequently, the entire cryptocurrency market will be more active if Bitcoin’s volatility rises. 

So here are three events that might move the US dollar consider next week: 

  • ISM Manufacturing and Services PMI 
  • ADP Employment Change 
  • Non-Farm Payrolls

ISM Manufacturing and Services PMI

The PMI data is calculated monthly and interpreted in relation to the 50 level. A print bigger than 50 shows an expanding sector, while one above 50 shows an expanding sector. 

The United States is a service-based economy, so the services sector tends to have more weight for the US dollar. However, this week, the focus will be on the manufacturing data because it is forecast to come out below the 50 level. Any positive surprises should see the US dollar bouncing higher. 

ADP Employment Change

July’s ADP Employment Change or the private payroll numbers will be released on Wednesday. Market participants look at the private payrolls in anticipation of the all-important Non-Farm Payrolls report due two days later. 

This week, the market expects the US economy to have added 195k new jobs in July. Details matter because the ADP and NFP numbers often reflect the same thing. 

Non-Farm Payrolls

Because next Friday is the first Friday of the new month, the NFP report for the month of July is due. The market expects the US economy to have added 200k new jobs in July and the unemployment rate remained steady at 3.6%.

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ADA/USD price forecast following the Fed’s July interest rate decision

  • Fed’s July decision did not impact the cryptocurrency market
  • Despite rallying in 2023, ADA/USD dipped below the 2022 lows
  • A double bottom pattern might be in place, and a move above $0.55 would confirm the reversal pattern

Three central banks announced their interest rate decisions this week, and the Federal Reserve was one of them. For those trading cryptocurrencies denominated in US dollars, the Fed’s decision marked one of the most important events of the summer. 

Following the decision to “skip” a rate hike in June, the Fed signaled that it would hike the rates in July, despite the clear improvements in the fight against inflation. Accordingly, the market priced in a rate hike, and the Fed delivered. 

As such, all the attention was on what the Fed will signal moving forward – more tightening or the fact that it had reached the terminal rate? Every detail was important for the US dollar as its volatility directly impacts cryptocurrency traders. 

As it turned out, the Fed did hike the funds rate by another 25 basis points and did not signal that the current cycle ended. Therefore, the outcome of the Fed’s meeting might be viewed as hawkish for the US dollar, and so, it is no wonder that the cryptocurrency market continued its consolidation and experienced less volatility following the Fed meeting than the traditional currency market. 

Cardano chart by TradingView

ADA/USD unable to break above horizontal resistance

Cardano (ADA) rallied in 2023 as Bitcoin and other major cryptocurrencies bounced from their 2022 lows. In doing so, the market met little or no resistance until the $0.4 area. This is an area where ADA/USD found support in the past, and now support turned into resistance.

For several months now, ADA/USD was not able to break and hold above resistance – every time sellers emerged. So heavy was the selling pressure that the market even dropped below the 2022 lows. 

Naturally, this week’s Fed decision was important because it might be that ADA/USD formed a double bottom with the last attempt to the lows. While the Fed’s decision did not trigger a lower dollar, the bias remains somehow bullish for ADA/USD because of the possible double bottom. 

Therefore, if ADA/USD climbs above $0.4, more buyers might step in to trade the pattern’s measured move, seen in orange above. It points to $0.55, and on such a market move, the bearish bias might finally be left behind. 

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Bitcoin price forecast with the help of EUR/USD

  • Bitcoin and EUR/USD have a direct correlation
  • EUR/USD leads
  • Bitcoin’s recent bullish trend has been based solely on the dollar’s weakness

Today is the last trading day of a busy trading week in the traditional currency market. Three central banks (Federal Reserve, European Central Bank, Bank of Japan) have announced their interest rate policy decisions.

For cryptocurrency traders, and especially for Bitcoin investors, the first two central banks directly impact Bitcoin’s price action. As it turns out, after being part of numerous institutional investors’ portfolios, Bitcoin’s price just follows the US dollar movements.

Sure enough, the volatility in the cryptocurrency space is much higher than in the traditional currency market. Nevertheless, one cannot ignore the direct correlation between the EUR/USD exchange rate and Bitcoin in the past several months.

Bitcoin chart by TradingView

Bitcoin and EUR/USD have a direct correlation  

EUR/USD bottomed in October last year and has rallied ever since. Sure enough, corrections appeared, but the overall trend remained in place.

The chart above shows the different cycles that the EUR/USD formed from left to right. Unsurprisingly, Bitcoin followed.

For example, despite making a new lower low at the end of 2022, Bitcoin bounced and rallied at the start of the new year. Basically, it caught up with the EUR/USD bullish trend.

Since then, every correction or rally on the EUR/USD pair was met with a similar response from Bitcoin. Therefore, it is fair to assume that if Bitcoin hodlers hope for the price to break and hold above $30k, it can only do so with a bullish EUR/USD price action.

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Dogecoin rallies in July, as a double bottom might already be in place

  • Dogecoin failed at $0.1 resistance in 2023 and made new lows
  • A double bottom might already be in place
  • If Dogecoin breaks above resistance, more buying should follow

Financial market participants await the Federal Reserve’s monetary policy decision later in the North American session. The Fed is expected to raise the funds rate again by another 25bp. 

Therefore, it will be interesting to see the message regarding future decisions. Most likely, the Fed’s Chair, Jerome Powell, will offer some hints during the press conference to follow the FOMC Statement, and so the dollar’s volatility is poised to increase. 

The Fed’s decision interests all market participants, regardless of the market traded. Cryptocurrency traders speculating on US dollar pairs get ready for a sharp increase in volatility too. 

Dogecoin, for instance, looks interesting. It rallied in 2023 together with other major cryptocurrencies, only to be rejected at the $0.1 resistance area. 

The rejection was so powerful that Dogecoin gave up all of its gains and made a new lower low. However, other cryptocurrencies, such as Bitcoin, did not give up their gains, making it even more difficult for Dogecoin bulls to hold their positions. 

The good news is that Dogecoin bounced from the lows, and a double bottom pattern might already be in place. As such, one should not be surprised to see the cryptocurrency trying again to break the $0.1 resistance area. 

Dogecoin chart by TradingView

Dogecoin should rally some more if it overcomes the horizontal resistance

A double bottom is a bullish reversal pattern forming at the end of bearish trends. The $0.06 area provided support, and now the path of least resistance leads to another attempt at the $0.1 area. 

A daily close above resistance should open the gates for more upside. The pattern’s measured move points to much higher levels, as even the neckline lies way higher. 

Summing up, Dogecoin bulls should welcome the recent price action, as the rally in July might just be the start of a meaningful bullish trend. 

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Solana finds stiff resistance at $30 in July, but bulls keep trying

  • Solana made a new high for the year
  • A double bottom might be in place
  • All eyes are on the Federal Reserve’s interest rate decision

Investors in the cryptocurrency market have had a mixed year so far. Those betting on the rise of Bitcoin or Ripple have enjoyed impressive returns. 

For example, Ripple has delivered a triple-digit return so far in the year, as the cryptocurrency reacted to a positive ruling by a federal judge saying that when sold to institutional investors, Ripple is a security. 

Bitcoin is up around 80% on the year, on a mix of short-squeezing and dollar weakness. 

But not all cryptocurrencies have rallied like that. Take Solana, for instance. It rallied at the start of the year together with Bitcoin, but then, unlike Bitcoin, it gave up most of its gains. 

Nevertheless, during July, a short squeeze sent the market back to the horizontal resistance given by the $30 level. While the market failed to hold above, it did make a new high for the year, triggering optimism among investors. 

Solana chart by TradingView

Is a double bottom in place?

The $30 level offered resistance for the entire year. The fact that the market pierced it is a bullish sign, and one should not be surprised to see another attempt higher. 

However, there is one condition that must hold. That is, Solana should not make a new low. 

If it does not, one can talk about a possible double bottom area, even though the second bottom is a bit higher than the first one. Given the fact that this week the Federal Reserve of the United States is about to announce its interest rate decision, volatility will increase in the cryptocurrency market too. As such, another attempt at the resistance area, which provided support back in the past, should not be discarded, especially if the Fed signals that the terminal rate for the current tightening cycle is reached with this final hike. 

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Top 3 cryptocurrencies that outperformed the US dollar in 2023

  • Ripple delivered triple-digit returns so far in the trading year
  • Bitcoin consolidates around the $30k level
  • Ethereum is up more than 50% YTD

During the summer months, trading slows as financial markets usually enter consolidation. The cryptocurrency market is no different – look at Bitcoin, and its inability to convincingly hold above $30k tells everything. 

As such, this is the best time to look back and see which cryptocurrencies have outperformed the US dollar in the first seven months of the year?

The chart below shows some dispersed performances. While some cryptocurrencies have rallied, others remained flat. In other words, the crypto market is no different than the stock or the FX market from this perspective, as it is equally important to find the right asset to invest in. 

Bitcoin chart by TradingView

Ripple leads the pack

Ripple is the single major cryptocurrency to have delivered triple-digit returns YTD. Sure enough, the bulk of the gains came from the reaction to a recent ruling saying that Ripple is a security when sold to institutional investors. 

The good news, though, is that the spike higher was not retraced. Instead, the market consolidated at those higher levels, telling us that this is more than just a short squeeze. 

Bitcoin’s YTD performance exceeds 80%

For most of the time in 2023, Bitcoin delivered the biggest return. It rallied right from the start of the year, but the rally stalled recently. 

Bitcoin has a hard time breaking and holding above $30k. Its performance this year is closely related to the US dollar’s performance. 

For instance, despite the Fed hiking the funds rate several times this year, the EUR/USD trades close to its highest levels for the year. Hence, the dollar’s weakness transpired in other markets, including cryptocurrency.

Ethereum delivered more than 50% return to its investors

Ethereum is in third place, with a return of more than 50% since the start of the year. After initially rallying with Bitcoin, it gave up more of its gains during consolidation. 

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Should you buy Ethereum as it diverges from Bitcoin?

  • Ethereum’s price lags behind rival cryptocurrencies
  • If Ethereum follows Bitcoin, a new yearly high might be in the cards
  • Next week’s Federal Reserve meeting is key for the US dollar

The cryptocurrency market bounced strongly in 2023. Following a disappointing 2022, bulls are back as Bitcoin and other leading cryptocurrencies rallied hard.

For example, Bitcoin gained 81.86% YTD while Ripple rose as much as 137.53%. Compared with the two, one might say that Ethereum price lags, up “only” +58.37% this year.

In other markets, such returns are deemed literally impossible. Not in the cryptocurrency market, though, where fortunes are made (and lost) practically overnight.

So can one buy Ethereum because of the lack of momentum compared to its peers? Moreover, following Bitcoin’s steps, will Ethereum make a new high for the year?

Ethereum chart by TradingView

Federal Reserve to hike the funds rate again next week

Next week will be decisive for the short and medium-term perspective on the US dollar. The Federal Reserve of the United States is due to set the monetary policy next Wednesday, and the probability of a hike is close to 100%.

Never in history did the Fed ignore what the market has already priced in, so a rate hike is certain.

But the Fed may easily turn the tables around during the press conference that follows the FOMC Statement.

If the Fed Chair, Jerome Powell, hints at the terminal rate being hit, then the market will try to anticipate when the first rate cut will be delivered.

Hence, while a rate hike next week is hawkish the dollar, the Fed may deliver a dovish message during the press conference. If that is the case, expect Ethereum to make a new high for the year.

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Ripple technical analysis update following last week’s landmark federal ruling

  • A US federal judge ruled last week that Ripple is a security when sold to institutional investors
  • Ripple’s price jumped by more than 30%
  • Only a close above parity would invalidate the bearish bias

Ripple squeezed higher last week following a landmark decision from a federal judge ruling that it is a security when sold to institutional investors. If crypto is a security or not has been the subject of many debates lately.

The ruling is a major victory for Ripple, even though the same judge ruled that Ripple is not a security when sold to retail investors. Nevertheless, Ripple’s price bounced from its long-term consolidation area, up over 30% in one single day.

For technical traders, the question is whether the higher spike is enough to break the bearish trend. As it turns out, bulls will have to push some more for Ripple’s bearish trend to end.

Ripple chart by TradingView

Ripple should trade above parity with the US dollar for the bearish bias to end

Despite the spike higher, Ripple’s price remains under pressure unless it manages to climb above parity with the US dollar.

In other words, it remains sensitive to US dollar news, and any dollar strength should result in Ripple giving up more of its recent games.

However, it would all change if the market climbs above parity. This area has provided resistance since the start of 2022 and still does – after all, it contained the price action following last week’s news.

The good part for bulls is that breakout came at the end of a bullish triangle. The said triangle acted as a reversal pattern, and triangles like these usually appear at the end of bearish trends.

All in all, the bias remains bearish unless more strength leads to Ripple trading above parity. Until then, look for US dollar news to drive the price action.

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Bitcoin consolidation continues ahead of the US inflation report

  • Bitcoin forms a possible pennant formation ahead of the US inflation report
  • The disinflationary process in the US is set to continue
  • If the dollar takes a hit, Bitcoin may rise above horizontal resistance

Summer trading is usually slow and tricky. Even the cryptocurrency market often consolidates levels longer than the norm.

It is the case with Bitcoin lately. The good news for cryptocurrency fans is that Bitcoin price holds close to the year’s high.

Therefore, one could only ask if this consolidation is a continuation pattern before another leg higher or if sellers put pressure here ahead of the key US inflation report to be released tomorrow.

Like it or not, Bitcoin’s performance is linked to the way the US dollar moves. As such, US economic data is critical for the digital asset’s performance, especially data directly impacting the Federal Reserve’s monetary policy decisions.

June US CPI is expected to show further declines

It should be obvious by now that inflation is cooling in the Western Hemisphere. Not all countries have seen similar trends, but the disinflationary process is in full force.

That is why traders expect the June US CPI report, due for release tomorrow, to show that the annual inflation in the United States dropped to 3.1% from 4% previously. If matched by the actual data, the US dollar will take a hit as the bets of further increases from the Fed will decline dramatically.

Hence, Bitcoin should pop above the horizontal resistance seen at $32k.

Bitcoin chart by TradingView

A possible pennant keeps Bitcoin hodlers optimistic

A pennant is a bullish technical analysis pattern. The market typically rallies after a bullish breakout and travels a distance equal to the distance prior to the pennant’s formation.

In Bitcoin’s case, this is about $6k on top of $31k, so $37k is the logical target.

But that won’t happen unless the US inflation report delivers a positive surprise. More precisely, if the inflation cools down more than expected, the Fed is less likely to raise rates, and so the US dollar should weaken.

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Cryptocurrencies are back in fashion as the total crypto market cap keeps rising

  • The total cryptocurrency market capitalization grew by more than 50% in the last six months
  • Investors are optimistic as Bitcoin’s price holds near the yearly high
  • Ethereum, Litecoin, and Ripple have followed Bitcoin higher

The first half of the trading year is behind us, and one of the most notable developments is the increase in the total crypto market capitalization. Following 2022, when many crypto investors got fed up with industry scandals and left, the 2023 rally looks like the start of a new bullish market.

The performance is even more impressive, given that the US dollar is trading with a mixed tone against its fiat rivals. 

Investors’ renewed interest in cryptocurrencies led to the total market capitalization growing by more than 50% in the year’s first half. Only in the last week, the market grew by more than 3%, and investors are optimistic because Bitcoin, the leading cryptocurrency, holds near the yearly high. 

Ethereum, Litecoin, and Ripple have followed Bitcoin higher

Bitcoin is the main reason why investors are optimistic about the cryptocurrency industry despite the ongoing scandals, frauds, and lawsuits. In the end, all that matters for market watchers is that Bitcoin’s price holds close to the yearly high, despite rallying in 2023 by over +85%. 

Therefore, the path of least resistance in the year’s second half seems to be the upside. 

Bitcoin chart by TradingView

Not all currencies performed like Bitcoin, though. For instance, Dogecoin is flat on the year, up by about +0.3% in the first six months of 2023. This is a huge divergence from what Bitcoin and other cryptocurrencies did (e.g., Ethereum, Litecoin, Ripple), and it reflects the crypto investors’ concentration in a few cryptocurrencies. 

Moving forward in the year’s second half, crypto investors might want to watch the developments in the traditional currency market. More precisely, what will the Fed do with the funds rate? 

If the US dollar loses ground against its rival fiat currencies in the next six months, Bitcoin and the other leading cryptocurrencies are well positioned to rally some more. As the Fed paused the rate hikes in June, one should embrace the possibility of the current funds rate being the terminal one for this tightening cycle. 

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