Analysts believe Bitcoin, Ethereum may face further downside in the short term
Analysts believe Bitcoin, Ethereum may face further downside in the short term Gino Matos · 3 days ago · 2 min read
BTC and ETH still have significant challenges in the short term, as they must conquer key supports in the daily chart.
2 min read
Updated: Aug. 9, 2024 at 7:53 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bitcoin (BTC) and Ethereum (ETH) recovered 21% and 18%, respectively, from their bottoms registered after the Aug. 4 crash.
However, Aurelie Barthere, Principal Research Analyst at Nansen, told CryptoSlate that the worst may not be over yet. She explained:
“BTC (and ETH) have hit local bottoms, but the daily trend still looks negative: the 50-day moving average is about to cross below the 200-day moving average.”
Barthere added that this creates the technical pattern known as “Death Cross,” which usually precedes a price downside.
Thus, to avoid a bearish sign on its chart, the Nansen analyst explains that BTC needs to hold above the $62,000 price level. Yet, the current all-time high zone between $70,000 and $71,000 is still a strong threshold of resistance.
Barthere added:
“Psychologically, a few traders have been hurt by the March and July sell-offs and this might be a very difficult threshold to cross.”
Meanwhile, ETH shows a strong correlation with BTC, especially during sell-offs. The analyst points out that ETH already displayed a Death Cross on its daily chart and needs to hold above $2,700, which is a significant resistance tested in January and this week.
Crypto market held down by US elections
The massive sell-off in risk assets seen earlier this week is attributed to the unwinding of the Yen carry trade, due to the Bank of Japan (BOJ) cutting interest rates too fast.
Bitfinex analysts shared with the publication that the move from BOJ will allow a more gradual unwinding process, acting as a bailout for most leveraged traders, particularly in the US.
Therefore, the most significant narrative impacting crypto markets more than any other is the US election, according to Bitfinex analysts.
The analysts added:
“As Democrat nominee Harris has seen an increase in odds of winning to almost equal Republican nominee, former President Trump’s odds, it induces uncertainty in markets, especially crypto.”
At the time of writing, Harris and Trump are tied at 49% odds on the prediction market Polymarket, with the Democrat nominee briefly surpassing the former US president earlier today.
According to the analysts:
“The clear stance that the market has shown based on recent events is that Trump winning is being priced in as a net positive for crypto and vice versa for Harris winning.”
If Trump’s current odds of winning are at a bottom, Bitfinex analysts expect a market recovery to continue.
