Bitcoin and Ethereum forecast for the week ahead

Bitcoin, Ethereum – Talking Points

• Macroeconomic data points to a recession, reducing risk appetite
• Bitcoin continues to roll around the key $20,000 level
• Ethereum rallies continue to fail at the key $1,400 pivot zone

Bitcoin and Ethereum Outlook: Neutral

Bitcoin and Ethereum continue to tread water above their YTD lows as economic data continues to allow the Federal Reserve to remain aggressive in its fight against inflation. Non-farm payrolls data on Friday showed that the US labor market continues to be hot, although there are some signs of cooling. With the work portion of the Fed’s mandate in check, Fed officials have indicated they will remain fully committed to returning inflation to target. With hawkish Fed policy showing no sign of abating, the outlook remains bleak for risk assets.

Despite the recent rise in US Treasuries and collapse in stocks, both Bitcoin and Ethereum have managed to keep their heads above water. While stocks have pierced their June lows, Bitcoin and Ethereum have yet to break their respective lows. This could all change next week, as Thursday’s CPI print could represent a major volatility event. After the earlier CPI release on September 13, risk markets fell as inflation estimates rose.

United States Economic Calendar

Courtesy of DailyFX Economic Calendar

Despite Friday’s rout in risk assets, Bitcoin continues to remain buoyant over recent swings. The price appears to be wrapping around the key psychological level of $20,000 as the price consolidated into a tight range following the September 14 CPI print. Bulls have strongly defended the $18,500 area, while bears have prevented any break above $20,400 from gaining steam. Price in particular has made a series of higher lows this month, lending support to the idea that something bigger could be at play here. If the markets really “capitulated” as many are looking for, highly speculative assets like Bitcoin would probably not be showing such vivid signs of life. While more price action is needed, an ascending triangle appears to be forming in BTCUSD. Should this formation materialize, higher prices can be expected.

Bitcoin 4 Hour Chart

Chart created with TradingView

Like Bitcoin, Ethereum is holding well above its YTD lows of $880. ETHUSD remains confined to a much tighter range than Bitcoin, with the price failing to significantly break into a key pivot zone around $1,400. Ethereum has largely struggled since the completion of the “merger” in September, with the network upgrade becoming a “sell the news” event. As the outlook for risk continues to worsen, market participants may continue to closely monitor economic data as Fed policy appears to be driving all markets at the moment. With major event risk on the horizon next week, traders should keep an eye on how/if Ethereum breaks its recent range. As gravity continues to work hard on stocks and bonds, crypto continues to defy the odds.

Ethereum 4 Hour Chart

Chart created with TradingView

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— Written by Brendan Fagan

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