InvestMacro

• Bitcoin ↑ 5% this week

• Roughly 4% away from all-time high

• Over past year NFP triggered moves of ↑ 2.5% & ↓ 1%
  

• Key level of interest – $72,000
  

Are Bitcoin bulls gearing up for another charge higher?

Well, the world’s largest cryptocurrency has jumped almost 5% this week, trading around $71,000 as of writing.

Bitcoin along with other cryptocurrencies seem to be supported by the prospect of lower US interest rates in 2024. But another major factor is the monster inflows into exchange-traded funds holding the tokens.

According to data from Coinglass among other sources, Bitcoin ETFs saw a whopping $886.6 million inflows on Tuesday!

Source: Coinglass 

This was the best day of inflows since mid-March and the second-largest amount since spot ETFs launched this year. These bullish forces may keep the “OG” crypto buoyed ahead of Friday’s US jobs data.

As covered in our trade of the week, the incoming NFP report is likely to influence bets around when the Fed cuts rates in 2024.

Traders are currently pricing in a 75% probability of a 25-basis point Fed cut in November with a move fully priced in by December.

Any changes to these expectations may influence cryptocurrencies which have shown sensitivity to interest rates.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 2.5% or declines of 1% in a 6-hour window post-release.

What does this mean?

Bitcoin is trading roughly 4% away from its all-time high at $73850.

So essentially, a disappointing jobs report that fuels rate cut bets could push prices closer to all-time highs.

Just to be clear, past price movements do not guarantee future results but can be used to highlight how Bitcoin has reacted to the US jobs report.

It’s not only Bitcoin that may experience big moves on Friday…

• AVALANCH: ↑ 4.0 % or ↓ 2.0%

• CARDANO: ↑ 3.4% or ↓ 1.6%

• SOLANA: ↑ 3.2 % or ↓ 2.7%

• CHAINLINK: ↑ 3.0 % or ↓ 1.2%

• DOGECOIN: ↑ 2.8 % or ↓ 1.1%

• LITECOIN: ↑ 2.2 % or ↓ 1.0%

• BITCOINC: ↑ 2.0 % or ↓ 1.7%

• ETHEREUM: ↑ 2.0% or ↓ 1.3%

• POLYGON: ↑ 1.7% or ↓ 1.5%

• RIPPLE: ↑ 1.7% or ↓ 1.1%

All 10 cryptos listed above are offered by FXTM as Crypto CFD’s.

Technical outlook…

Bitcoin remains trapped within a range on the weekly charts with bulls approaching the $72,000 resistance.

Prices have turned bullish on the daily charts after the breakout above $70,000. The upside momentum may take the crypto towards the $72,000 resistance level in the short term.

• A solid breakout above $72,000 could open a path toward the all-time high at $73850.

• Should prices fall back below $70,000, bears may target $67,000.

• Ethereum ↑ over 20% this week
  

• Crypto could rally another 35,000 points
  

• Prices bullish on D1 but RSI overbought
  

• Key level of interest at $3806.49 & $40000

Ethereum is back in the spotlight after soaring over 20% this week.

The world’s second-largest cryptocurrency by market cap has been boosted by growing expectations around US regulators finally approving spot ETFs.

Investors remain hopeful after the US Securities and Exchange Commission (SEC) showed an interest in giving the green light after months of uncertainty.

This could be a pivotal moment for Ethereum which may ride the crest of this ETF wave to a fresh year-to-date high beyond $4094.

However, this will depend on what the SEC does tomorrow (Thursday, May 23rd) – the final deadline to decide on VanEck’s spot Ethereum application.

Just like we saw with Bitcoin ETFs, the approval of an Ethereum ETF would increase the exposure of the cryptocurrency. This may lead to potential inflows of new investors due to the easier and greater access.

Regarding the technicals, Ethereum bulls (those looking to see Ethereum prices rally), could set their sights on these near-term resistance levels.

• $3806.49: – The 261.8 Fibonacci level where price is testing today after being rejected yesterday.

• $40000: – A psychologically important level.

The crypto bears (those looking to see prices of Ethereum decline), on the other hand may take advantage of a possible “buy the rumour sell the fact scenario”, and have their sights set on the near term support at:

• $3445.05 which is the golden 161.8 Fibonacci ratio.

The Fibonacci retracement tool is drawn from May 6th, high at $3221.68 to May 14th, low at 2860.24.

Looking at the Relative Strength Index (RSI), an indicator that highlights zones in the market that are saturated with buyers (overbought) and sellers (oversold), Ethereum is technically overbought.

• Bitcoin halving done and dusted

• Ethereum in focus ahead of SEC decision

• ETH ↓ 20% from 2024 peak

• Prices trending higher on D1 chart

• Key levels at 100 day SMA, $3255 and 50-day SMA

Bitcoin’s halving event is done and dusted! Marking a landmark moment in the world of digital assets.

This shifts our focus towards Ethereum which could be rocked by the Securities and Exchange Commission’s (SEC) looming decision to vote on Ethereum spot ETF applications.

The world’s second-largest cryptocurrency has shed over 20% from the 2024 high, though still up 40% year-to-date.

Fun fact: Ethereum hit an all-time high of $4866.4 in November 2021.

The lowdown 

One of the key forces supporting Ethereum in Q1 was growing anticipation over a green light from the SEC on May 23rd following the spot Bitcoin ETF approval in January.

Fast-forward to today, confidence has significantly declined over the SEC approving the ETF applications.

The bigger picture 

Just like we have seen with Bitcoin ETFs, the approval of an Ethereum ETF would increase exposure to the cryptocurrency.

It will provide easier and greater access to the world’s second-largest digital currency without having to own it – representing potential inflows of new investors.

Where we are now

Much has changed since the start of 2024 with the lack of engagement between the SEC and applicants sapping confidence over the possibility of an approval on May 23rd.

On top of this, recent news about the SEC investigating companies associated with the Ethereum Foundation adds another layer of uncertainty ahead of the decision.

A bright spot 

Hong Kong regulators have recently approved Bitcoin and Ethereum ETFs, marking another positive step towards mainstream acceptance.

Such a development could spark acceptance from other regulators in Asia and across the world.

What does this all mean?

In a nutshell, Ethereum prices could turn volatile over the next few weeks as the SEC decision looms.

Where there is volatility, this presents potential trading opportunities.

How to take advantage of this

There are 2 potential outcomes to the SEC’s spot ETF decision on May 23rd.

    1) SEC rejects all Ethereum ETF applications.

This seems to be the expected outcome for markets with the approval seen later in the year or even 2025. Nevertheless, the initial disappointment could hit Ethereum prices – capping upside gains from other forces.

    2) SEC approves Ethereum ETF applications.

This decision may catch markets by surprise, triggering an aggressive appreciation in Ethereum prices due to the prospects of fresh inflows from retail and institutional investors.

What about the technicals?

The technicals paint a mixed picture on the daily charts. Although Ethereum is respecting a bearish channel, support can be found at $2855 and the 100-day Simple Moving Average.

• A solid breakout and daily close above $3255 may open a path toward the 50-day SMA at $3475 and $3724.

• Should prices slip back below the 100-day SMA at $3063.8, this could open a path back towards $2855. A solid bearish move under $2855, could fuel a further selloff towards the 200-day SMA.

• Big week for “OG” crypto

• Halving event looms large

• Watch out for geopolitical tensions
  

• Prices under pressure on D1 chart

• Key levels at $61500, $65000 and $68000
  

In case you missed the memo, Bitcoin’s halving is almost here!

This is a significant event that reduces the mining rewards for the “OG” crypto by half.

But before we cover what, when, why and how to prepare for this event…

Watch out for geopolitical tensions.

Bitcoin along with other cryptocurrencies may be influenced by escalating geopolitical tensions in the Middle East.

On Saturday, Bitcoin prices tumbled over 8% as risk aversion soured appetite for riskier assets. The “OG” crypto along with other altcoins may be in store for more pain despite the upcoming halving if tensions escalate further between Israel and Iran.

With the above said, here is a quick lowdown:

In our 2024 market outlook, bitcoin was one of the assets we picked that could see monster moves.

The approval of Bitcoin ETFs back in January has boosted its mainstream acceptance with fresh inflows propelling the cryptocurrency to all-time highs. In fact, at one point in Q1 prices were up over 70%.

Note: Bitcoin is currently trading 10% away from its all-time high.

    1) What is the Bitcoin halving?

This event reduces the rewards for mining new blocks in the Bitcoin blockchain by half.

It happens approximately every four years with the first halving taking place in 2012.

Fast forward, we a less than a few days away from the fourth halving which will reduce the block reward from 6.25 BTC to 3.125 BTC.

Note: At launch in 2009, the reward was 50 BTC per block.

    2) When is it expected?

While the exact date of the halving is unknown, it is expected to happen when the total number of bitcoin blocks hit 740,000. Market expectations range between April 19th and April 20th.

    3) Why does it happen?

To put things into context, imagine if you are in the business of mining a precious resource, and suddenly, the rewards received from extracting the resources are halved. Will it still be worth all the effort?

It is the same concept with Bitcoin mining which is designed to slow down supply and increase scarcity – potentially leading to higher prices if demand remains strong.

    4) How can you take advantage of this?

Historically, post-halving periods have seen significant price increases with the one back in May 2020 no exception. Prices appreciated a whopping 230% over a 7-month period, reaching an all-time high just below $29,000 by year end.

Should history repeat itself once again, this could propel Bitcoin to fresh all-time highs over the next few months.

It does not end here…

Given the hype this major event may create and increased attention towards the crypto space, it could indirectly impact altcoins.

So, watch out for Ethereum, Dogecoin, Solana and Avalanche which have shown a positive correlation above 90% to Bitcoin’s move at any given 5-day rolling period over the past 5 years!

On the flip side…

The market reaction to the upcoming Bitcoin halving could be different.

Bitcoin has come a long way since the first halving back in 2012 with much more media coverage and awareness compared to the past. Essentially, the expected bullish reaction to the upcoming halving may already be priced in.

Meaning, traders may end up adopting a ‘buy the rumour, sell the fact’ response to the event with the expected rally delayed or even disappointing expectations.

    5) Technical forces

Prices seem to be under pressure following the sharp selloff witnessed on Saturday. Although the broken symmetrical triangle may support bears, prices are trading within a wide range on the daily charts. Support can be found around $61500 and resistance at $73850.

• A solid breakout and daily close back above $65000 may open a path towards $68000 and $71000 before bulls challenge $73850.

• Should $65000 prove to be reliable resistance, this could trigger a selloff towards $61500 and $60000.