Bitcoin Prepares for a Light Recovery Rally as Ethereum Struggles Economically and Fundamentally
Bitcoin Surprised Cryptocurrency Investors With Its Unexpected 9% Rally That Pushed The First Cryptocurrency Above $22,000, Which Could Be The Beginning Of The Previously Mentioned Potential Rally That Will Lead To A Weakness Of The US Dollar And A Volatility Spike .
Two reasons behind a possible rally
As previously mentioned on U.Today, the US Dollar remains a major source of pressure on the cryptocurrency market as investors still prefer less risky options over volatile assets like Bitcoin or Ethereum.
But the easing US dollar may have a temporary effect on the cryptocurrency market as the Fed’s flurry may not fuel the rally of the world’s leading currency for long, especially if regulators calm down on the upcoming rate hike.
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With the weakening of the US dollar, we will most likely see bitcoin break out in the coming weeks as it is already craving volatile moves that will break a two-week streak of anemic performance.
As shown by technical analysis, bitcoin successfully broke the upside from the pennant highlighted by Peter Brandt and headed towards $22,000. Unfortunately, a lack of market flow and low open interest caused BTC to drop below the local resistance at $21,800.
Key moments for Ethereum
The second largest cryptocurrency in the market is reaching significant resistance on the charts as the financial performance of the network is weaker than ever. According to data from Token Terminal, Ethereum generated about $23.8 million in supply side and protocol revenue in July, making it its worst month since the summer of 2020.
The main reason behind the sharp drop in network revenue is the massive outflow of funds from the DeFi and NFT industries that propelled the Ethereum bull run in 2021. The final blow that pushed Ethereum down was the lack of activity around the Web3 industry which should have been the next driver of the cryptocurrency market.
On the daily chart, Ethereum has reached a local resistance of $1,250 and it is currently failing to break above it. A reversal to $1,200 will push it back to the consolidation channel for a few more days.
Current status of the cryptocurrency market
Generally speaking, the cryptocurrency industry remains under heavy macroeconomic pressure as risk appetite demand is still at extremely low levels compared to 2021, fueled by frequent rate hikes and a bleeding stock market. Most financial analysts expect a gradual recovery by mid-2023.
