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Bitcoin stagnates, Ethereum rises: The crypto market at the beginning of the month

While the two largest cryptocurrencies in the world, Bitcoin (BTC) and Ethereum (ETH), initially moved sideways for months since the sell-off in May 2021, a consolidation below core resistance zones has been observed following the most recent recovery. While ETH is leaving these core resistances behind, BTC is meanwhile continuing to consolidate.

Corrections before trend continuation was yesterday! After Bitcoin and Ethereum had stabilized for months after a historical sell-off from their respective all-time highs, impressive recovery rallies have recently been observed. But at the respective 0.618 Fibonacci levels, the momentum threatened to wane.

Instead of the correction, thanks to the high demand, the consolidation below the core resistance zones, which can generally be viewed as bullish. And so it should come about that ETH will rise as if detached in early September 2021. Bitcoin on the other hand continues to consolidate.

The Bitcoin course runs below core resistances

The Bitcoin price has recently shown little momentum, while the BTC price seems to be between around 46,000 and 50,000 USD. The 72% recovery since the lows of July 2021 have long been forgotten and many market participants are already looking to see new all-time highs on the horizon. Well, it’s not that far yet, sometimes the Bitcoin course continues to fail at 50,000 or 51,000 USD.

The 0.618 or 61.80% Fibonacci level sits at USD 51,083, measured from the all-time high to the low of the past sideways movement between May and July 2021. And it is this golden price level that seems to be holding back the further price increase of the first and largest decentralized cryptocurrency . Besides the psychological resistance at $ 50,000.

At the same time, a falling RSI indicator can be observed in the daily chart. And even though it has been increasing recently, the trading volume seems to be on the whole decreasing even on the largest crypto exchange in the world, Binance. Is Bitcoin losing momentum here?

Well, basically two main scenarios seem to arise:

  • Bullish: The current price trend is indeed a consolidation below a core resistance. In this case, momentum should return to the Bitcoin price, along with increasing trading volume. As a result, buying pressure would increase further, the structure of supply and demand tilts in favor of buyers and resistance at USD 49,000 to 51,000 is broken. In this scenario, there is little doubt that $ 53,000 (the approximate threshold for a market cap of $ 1 trillion) and more would come into play.
  • Bearish: The Bitcoin price is not gaining momentum and the selling pressure is starting to dominate. This could convince other market participants to sell. A fall below the 200-day moving average (at around USD 46,081) could then lead to around USD 44,000 or even USD 42,500 or USD 40,000.

Ethereum is leaving consolidation behind

Historically, Ethereum has a strong correlation with Bitcoin. But from time to time the second largest cryptocurrency in the world temporarily detaches itself from this correlation. It is possible that such a temporary decoupling can currently be observed. In any case, ETH performs better than BTC and dissolved the consolidation below core resistances.

USD 3,351 was the price level of the 0.618 or 61.80% Fibonacci level and had held back the Ethereum price for longer. But apparently this is a thing of the past. With the expansion in trading volume, momentum seems to have returned to the market and ETH not only broke the golden Fibonacci level, but also another resistance at around USD 3,800.

The RSI indicator in the daily chart is now showing a bearish divergence (price reversal signal), but the strongly positive sentiment in the market must not be forgotten. Accordingly, there should be little between the ETH price and at least USD 4,000.

This results in two main scenarios:

Bullish: The bullish scenario has been $ 4,000 or more since the 98% rebound from the July 2021 lows. And this scenario seems to be observable at the moment. If USD 4,000 is not too big a psychological hurdle for the ETH price, the current all-time high of USD 4,372 could at least be tested.
Bearish: The Ethereum price sees strong selling pressure between USD 4,000 and 4,372 and must therefore reverse. A fall back below the golden Fibonacci level at USD 3,351 would be a severe setback for the sentiment in the market, which could then switch to uncertain and fearful with further sales.

Conclusion on the Bitcoin and Ethereum market analysis

The medium-term and long-term view looks positive for both Bitcoin and Ethereum. This can be seen on the basis of the fundamental data alone. The current market data is mixed, however, as we see ETH rise towards USD 4,000 and Bitcoin remains below the golden Fibonacci level.
The next few weeks should be exciting, especially against the background of the narrative surrounding an extreme shortage of the supply of both crypto currencies. If a supply squeeze manifests itself here, any negative signals should not have too great an effect.

More analyzes:

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Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.


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