Last week ended with a strong rise, and Bitcoin and Ethereum look set to start a new week in the green.
Bitcoin rallied to start the week yesterday, climbing back above $22,000, while Ethereum remained steady. Over the course of a week, however, the two largest cryptocurrencies on the market are performing identically (+12%), at the start of what could prove to be a lively week.
Indeed, bitcoin has shown its strength since breaking support at $18,600 on Wednesday; BTC has since climbed nearly 20%. The weekly RSI also shows bullish divergence for the first time since March, and the monthly for the first time since September 2021.
Compared to Vitalik Buterin’s crypto, bitcoin has outpaced Ethereum in recent days in terms of upside, even as the number two blockchain prepares for its biggest ever upgrade. Ethereum’s long-awaited upgrade to Proof-of-Stake is approaching, but Bitcoin continues to take center stage.
Recall that Bitcoin is coming back from a long way down, with the cryptocurrency parked at a low of $18,540 early last week, its lowest level in roughly a month and a half. However, the crypto then began a strong rally, which corresponded to some return of optimism that was also visible on the stock markets.
The scenario is the same this Monday morning, with optimism boosted by Ukrainian advances in the war against Russia, which give hope that the war will end sooner than expected. The Bitcoin price, like Ethereum and most other cryptocurrencies, is benefiting today.
Interestingly, the ETH:BTC ratio has been trending downward after peaking at 0.085 on Wednesday. It is now trading at 0.077, down 9.2%. The ratio had already touched 0.053 in June before ETH led a market-wide rally; for ETH:BTC to return to the low end of its range, it would have to fall another 33.49%. “The ratio refers to the amount of ETH it takes to buy one BTC. With a ratio of 0.077, one BTC is worth about 13 ETH.”
According to TradingView, BTC’s overall market dominance (indicating the largest crypto’s share of the global crypto-market capitalization) has also increased to 41.28% since reaching its multi-year support level of 39.79%.
Source : Tradingview
25,000 for BTC and $2,000 for ETH this week from The Merge?
This week, Ethereum’s blockchain will “merge” from Proof-of-Work to Proof-of-Stake, resulting in a 99% reduction in energy consumption and a 90% reduction in ETH emissions. The merger is expected to ship early on September 15, but ETH has yet to recover its August high of $2,015.
On the other hand, traders are awaiting the release of US inflation data, with the August CPI today at 2:30 p.m., data that could significantly influence expectations for the next US Federal Reserve (Fed) meeting. Indeed, higher-than-expected inflation could reinforce expectations of further aggressive monetary tightening, and thus weigh on Bitcoin and other cryptos.
Conversely, lower-than-expected inflation would reduce the pressure on the Fed, and allow it to consider a slowdown in rate hikes, which would have bullish consequences for Bitcoin, Ethereum, and other cryptos.
From a charting perspective, Bitcoin’s rise since yesterday is clearly improving its chart profile. From now on, the $22,000 threshold regained this morning is the first potential support to consider. On the upside, the $22,500 area, which has served as support several times in recent months, will be the first potential obstacle. After that, the way will be clear to the key threshold of $25,000.
For the price of Ethereum, the second largest cryptocurrency on the market, the $1800 threshold is an immediate resistance, before $1900. It is then directly the major psychological threshold of $2000 that could be targeted.
To summarize, both Bitcoin and Ethereum are currently showing encouraging starts to the week that suggest the possibility of reaching key targets as early as this week, but chart confirmation is still needed at this point.