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Bitcoin and Ethereum are still trading not far from their one-year lows. Over the past week, the two major crypto assets managed a small correction, but there is still no sign of an end to the downtrend that began last year. There has only been liquidity removal on the 4-hour timeframe for Bitcoin, which allowed a modest correction — the one we're seeing now. The fundamental backdrop remains weak for the crypto industry, mainly reflected in low spot demand, a capital shift into the AI sector, and the Fed's commitment to reaching 2% inflation, which implies at least the maintenance of tight monetary policy. Thus, we still see no basis for a sustained rally in Bitcoin and Ethereum.
Meanwhile, one potential support factor for Bitcoin is starting to stall. We have previously noted that the Clarity Act — designed to ease Bitcoin investment and make it more transparent and secure — has not been agreed in Congress. Today came news that Donald Trump's mega?plan to create a US strategic Bitcoin reserve is also coming apart at the seams. The original plan called for the Treasury to manage the strategic Bitcoin stockpile, with the fund to be replenished from confiscated crypto assets and possibly some purchases. However, legal problems have emerged that cast doubt on the Treasury's authority to control such an asset class. Transfer of the fund to the Department of Commerce is being discussed as an alternative, but lawmakers have not yet resolved the issue.
Equally important is the president's executive order mandating the indefinite retention of Bitcoin. The cryptocurrency remains highly volatile, which creates dissonance for many legislators in Congress. US lawmakers have yet to decide which federal agency should manage the Bitcoin reserve and how exactly those assets should be managed, given constantly changing valuations. As a result, Trump's plan to turn America into the "world's crypto capital" is currently faltering.
Bitcoin continues to form a full bearish trend. We still expect a decline targeting $57,500 (the 61.8% Fibonacci level of the three-year uptrend), although this level has essentially already been worked through. We do not believe the downtrend will end there. The last bearish FVG pattern formed in the $68,000–$70,700 area on the daily timeframe, so that area acts as a POI for short positions in the coming weeks. On the 4-hour timeframe, Bitcoin has begun a new corrective leg, but sell trades remain more attractive. There are no active patterns on the 4?hour chart at the moment.
A downtrend that began in August last year continues on the daily timeframe. The key sell pattern remains the bearish order block on the weekly timeframe. We do not believe the current downtrend is over, as there are no signs of its completion for either Bitcoin or Ethereum. Ethereum has resumed its decline with targets of $1,391 and $788, but the market is currently pausing in a daily?timeframe flat/range. Therefore, in the near term, we would watch for deviations above the upper band of the sideways channel to open shorts with targets of $1,680 and $1,505. On the 4?hour chart, Ethereum is near the upper band of the flat and has taken out sell-side liquidity. A drop for the second?largest cryptocurrency is possible in the near term.
CHOCH is a change of character / break of the trend structure. Liquidity means traders' Stop?Losses that market?makers use to build their positions. FVG is Fair Value Gap (area of price inefficiency). The price often moves quickly through such areas, indicating the absence of one side in the market. Later, the price tends to return and react to these zones. IFVG stands for Inverted Fair Value Gap. After a return to such a zone, the price does not react but impulsively breaks through and then tests it from the other side.
OB means Order Block. A candle on which a market?maker opened a position in order to harvest liquidity and then form their own position in the opposite direction.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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