Bitcoin and Ethereum Could Experience More Declines in the Near Future

Bitcoin (BTC) and Ethereum (ETH) have shown signs of recovery, with both cryptocurrencies bouncing back by 21% and 18%, respectively, from their recent lows following the crash on August 4.

Despite this positive movement, Aurelie Barthere, a Principal Research Analyst at Nansen, cautioned that the downward trend may not be fully reversed yet. Barthere noted that while BTC and ETH have hit local bottoms, the daily trend remains negative, with the 50-day moving average on the verge of crossing below the 200-day moving average. This technical setup, known as the “Death Cross,” typically signals a forthcoming price decline.

To prevent a bearish signal on its chart, Barthere emphasized that BTC must maintain its price above the $62,000 level. However, the current all-time high range between $70,000 and $71,000 poses a formidable resistance level for the cryptocurrency.

Barthere highlighted the psychological impact on traders who were affected by the sell-offs in March and July, suggesting that surpassing these levels could prove challenging.

In a similar vein, Ethereum’s price movement closely mirrors that of Bitcoin, particularly during market downturns. Barthere pointed out that ETH has already experienced a Death Cross on its daily chart and needs to hold above the $2,700 mark, a significant resistance level tested in January and more recently this week.

The recent sell-off in risk assets has been attributed to the unwinding of the Yen carry trade, triggered by the Bank of Japan’s swift interest rate cuts. Analysts from Bitfinex noted that the BOJ’s measured approach to unwinding the trade could provide relief to highly leveraged traders, especially in the U.S. market.

According to Bitfinex analysts, the prevailing narrative exerting the most influence on crypto markets is the upcoming U.S. election. As the odds of Democratic nominee Harris winning the presidency approach parity with former President Trump’s chances, uncertainty is mounting in the markets, particularly within the crypto sector.

The analysts observed that the market sentiment is currently swaying based on the perceived outcome of the election, with Trump’s victory seen as a positive development for crypto assets, while a Harris win is viewed with more caution.

As the election dynamics continue to evolve, the market is closely monitoring the odds on prediction platforms like Polymarket, where Harris and Trump are currently tied at 49%. The analysts anticipate that a clear direction in the election outcome could drive further market recovery.

In conclusion, the crypto market remains sensitive to external factors, with the U.S. election and technical indicators playing pivotal roles in shaping the current landscape for Bitcoin and Ethereum. Traders are advised to closely monitor key price levels and market sentiment to navigate the ongoing volatility in the cryptocurrency space.