Last week, Bitcoin jumped following the news that Greyscale won the lawsuit against the SEC as the D.C. court ruled that the SEC improperly rejected the Bitcoin spot ETF. This was seen as a positive news as Greyscale will have to reapply for a spot ETF but that an ETF is actually coming. The news helped to lift many cryptocurrencies like Ethereum, since Bitcoin is seen as the benchmark for the crypto market. Ethereum started to “selling the fact” soon after though and eventually returned to the previous lows. Looking at the bigger picture, we have some bearish news all around as CryptoQuant reported that Bitcoin trading volume is at its lowest in more than four years and on the macro side we have more and more deteriorating economic data that point to a possible recession in Q4 2023 or Q1 2024. On top of that, the central banks are expected to keep monetary conditions tight even if we start to see more weakness creeping in, which should ultimately make the economic conditions and the risk sentiment worse.
Ethereum Technical Analysis – Daily Timeframe
On the daily chart, we can see that Ethereum spiked higher following the news of Greyscale winning the lawsuit against the SEC but found strong sellers at the red 21 moving average and the 61.8% Fibonacci retracement level, eventually coming back to the previous lows. The price is now consolidating but the bias remains clearly skewed to the downside.
Ethereum Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the buyers had a chance to enter at the previous resistance turned support where they also had confluence with the 38.2% Fibonacci retracement level, but the price just fell through it like nothing and even broke out of the counter-trendline. This is a bearish sign, and we should see the sellers coming into the market at every pullback now.
Ethereum Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have now a consolidation near the lows. Such consolidations generally lead to big moves once the price breaks out. If the price breaks to the upside, we should see the buyers piling in to target the 1681 resistance and try a breakout to invalidate the bearish setup. The sellers, on the other hand, will want to see the price breaking to the downside to pile in even more aggressively and extend the fall into the 1400 level.
Upcoming Events
This week is a bit empty on the data front with just the US ISM Services PMI today and the US Jobless Claims tomorrow being the main highlights. If we see strong data, the market is unlikely to price an imminent recession and thus it shouldn’t affect Ethereum too much. On the other hand, weak data should bring back recessionary fears and likely trigger some risk aversion in the markets eventually weighing on Ethereum.