Bitcoin and Ethereum price action approaches a pivotal moment

Bitcoin and Ethereum price action approaches a pivotal moment

Proactive Investors - Bitcoin is currently changing hands at US$23,370 in what could prove to be a make or break moment for the benchmark cryptocurrency.

Markets are anticipating a ‘golden cross’ chart movement, i.e. its average 50-day price moving above its average 200-day price.

A golden cross has historically preceded a strong price rally on BTC/USDT; the last instance in October 2021 came before BTC headed to a record high of US$69,000.

Technical indicators are only backwards looking and hardly a foolproof trading strategy, but there are some bullish macro factors to consider too.

Risk assets have been on a roll since the US Federal Reserve’s 25 basis points interest rate decision this week. While the bank indicated that further hikes could be on the way, the markets don’t seem to be listening.

As Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, put it: "Markets are saying 'you can say what you want right now, we know you'll change your tune'."

“What investors have liked about this week’s central bank commentary is that it will seemingly become more dependent on inflation data after March. The market thinks inflation is tamed and thus central banks will be able to, or will have to, cut rates before year-end,” said analysts at Deutsche Bank (ETR:DBKGn).

Why is this good for bitcoin? If you believe those contending that bitcoin and stocks, as two risk-asset classes, generally move in the same direction (though history shows us that it’s not precisely true), then it makes sense for bitcoin to rally as investors continue to pour into the equities markets.

BTC/USDT: Bullish cross or bull trap? – Source: binance.com

The other side of the argument is that bitcoin is already overbought, given its stunning start to the year. We have already seen BTC enter into somewhat of a sideways trade since the tail end of January, suggesting that it will perhaps consolidate somewhere between US$23,000 and US$24,000

With that being said, why did BTC/USDT close one percent lower to US$23,500 yesterday?

Likely it was in response to bad earnings calls from the AAA tech stocks: Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL), all of which took a nosedive on the markets following their announcements.

After the US markets closed, results saw shares in Amazon lose 5.1% after hours in New York, while Alphabet gave back 4.6% and Apple fell 3.2%.

However, despite short-term losses, sentiment seems to be positive, with the Crypto Fear & Greed Index remaining in the bullish green zone.

In the short term, a strong buy wall should provide support at US$23,300.

As for Ethereum (ETH), the ETH/USDT pair cut back from an intraday high of US$1,714 yesterday to close at US$1,640 in the wake of the disappointing AAA results.

Today, the ETH/USDT pair has maintained this price point thanks to buyers’ support at US$1,630.

ETH gained some ground against BTC in the past couple of trading sessions, which has bucked the strongly bearish ETH/BTC throughout 2023 so far.

ETH/BTC recovers lost ground – Source: binance.com

In the altcoin space

The CoinDesk Market Index (CMI) fell -1.5% in the past 24 hours, suggesting a bearish attitude among altcoin traders.

Among the biggest fallers in the top-100 set were decentralised finance (DeFi) protocols DyDx and Synthetix, the Apotos (APT) blockchain and distributed GPU network Render (RNDR).

Top risers include the original Terra Classic (LUNC) token, Huobi Token (HT) and the Fantom (FTM) blockchain.

Global cryptocurrency market capitalisation is currently above US$1.07tn, while total value locked across all DeFi protocols fell -1.3% overnight to US$48.9bn.

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