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Market Recovery and Concerns for Bitcoin and Ethereum
Bitcoin (BTC) and Ethereum (ETH) have shown signs of recovery, bouncing back by 21% and 18% respectively from their recent lows following the crash on August 4th. Despite this rebound, Aurelie Barthere, Principal Research Analyst at Nansen, cautions that the worst may still be ahead. She elaborates that, while BTC and ETH may have reached temporary lows, the overall daily trend remains pessimistic. The 50-day moving average is on the verge of falling below the 200-day moving average, which is a concerning indicator.
Technical Patterns and Price Levels
Barthere pointed out that this situation creates a technical configuration known as the “Death Cross,” a pattern that often signals further price declines. To counteract this bearish outlook, she emphasizes that Bitcoin must maintain its position above the $62,000 mark. However, the significant resistance zone lies between $70,000 and $71,000, which poses a formidable challenge for BTC to overcome.
Additionally, she noted that many traders were impacted by the sell-offs in March and July, making it psychologically challenging for them to navigate this critical resistance level.
Ethereum’s Correlation with Bitcoin
Ethereum, closely correlated with Bitcoin, particularly during market downturns, is also under pressure. Barthere pointed out that ETH has already exhibited a Death Cross on its daily chart. For Ethereum, it is crucial to stay above the $2,700 level, which was a significant resistance point tested in January and again this week.
Impact of US Elections on Crypto Markets
The recent substantial sell-off in risk assets has been linked to the unwinding of the Yen carry trade, prompted by the Bank of Japan’s swift interest rate cuts. Analysts at Bitfinex stated that this decision by the BOJ may lead to a more gradual unwinding process, effectively providing some relief for heavily leveraged traders, especially in the United States.
Political Uncertainty and Market Sentiment
According to Bitfinex analysts, the prevailing narrative affecting the crypto markets is the upcoming US elections. With rising odds for Democratic nominee Kamala Harris, which have nearly matched those of Republican nominee and former President Donald Trump, market uncertainty has heightened. As of now, both candidates are equally positioned at 49% in the prediction market Polymarket, with Harris briefly leading earlier in the day.
Analysts from Bitfinex noted that the market sentiment suggests that a Trump victory is being viewed as a positive development for cryptocurrencies, whereas a win for Harris is perceived negatively. If Trump’s current winning odds are at a low point, analysts anticipate a continuation of market recovery.
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