Cryptocurrency Outlook: Bearish
- BTC[1]/USD[2] erases August gains as economic turmoil drives sentiment lower
- ETH[3]/USD ends six-week rally, July low looms
- US Economic data and Fed policy remain prominent drivers of market sentiment
Bitcoin and Ethereum Dragged Down by a Stronger Dollar
Bitcoin is currently down by 12% for the week (at the time of writing) as digital assets remain vulnerable to monetary policy which has been driving USD strength.
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The same fundamental factors that have been driving markets since the invasion of Ukraine remain a concern for cryptocurrency. With energy prices, rampant inflation and dampened sentiment weighing on risk assets, rate expectations have recently appeared to be the primary catalyst for price action[6].
After being rejected by the $25,000 resistance level late last week, the release of the FOMC minutes[7] on August 17 revealed that the Federal Reserve will continue to be pursue QT (quantitative tightening)[8] by raising rates aggressively until inflation has been tamed. This poses and additional threat to the broader crypto market while supporting the safe-haven Dollar[9].
Bitcoin (BTC/USD) Daily Chart
Chart prepared by Tammy Da Costa[10] using TradingView
ETH 2.0 is expected to be launch on September 15th which would successfully complete the transition to a proof of stake (PoS) network. With the merge expected to reduce the energy consumption for processing transactions, Ethereum has ended its six-week rally, falling towards the July low at $1,656.
Ethereum (ETH/USD) Weekly Chart
Chart prepared by Tammy Da Costa[11] using TradingView
For the remainder of the month, Core PCI, Fed Chair Powell’s speech, Michigan sentiment
