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Bitcoin, Ethereum - Talking Points

• Macroeconomic data continues to point to recession, diminishing risk appetite.
• Bitcoin continues to coil around key $20,000 level.
• Ethereum rallies continue to fail at key $1400 pivot zone.

Bitcoin and Ethereum Outlook: Neutral

Bitcoin and Ethereum have been continuing to tread water above their year-to-date lows as economic data continues to allow for the Federal Reserve to remain aggressive in its battle against inflation. Nonfarm payrolls data on Friday showed that the US labor market continues to remain hot, albeit there are some signs of cooling.

With the labor portion of the Fed’s mandate in check, Fed officials have indicated that will remain fully committed to returning inflation to target. As hawkish Fed policy shows no sign of abating, the outlook remains bleak for risk assets.

Despite the recent surge in US Treasury yields and collapse in equities, Bitcoin and Ethereum have both managed to keep their heads above water. While equities 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. Following the prior CPI release on Sept. 13, risk markets tanked as inflation metrics increased.

US Economic Calendar

Courtesy of the DailyFX Economic Calendar

Despite the Friday rout in risk assets, Bitcoin has been continuing to remain perky above recent swing lows. Price has been coiling around the key psychological level at $20,000, as price has consolidated into a tight range following the Sept. 14 CPI print. Bulls have forcefully defended the $18500 area, while bears have prevented any break beyond $20400 from gaining steam.

Price has notably made a series of higher lows this month, which offers support to the idea that something larger may be at play here. If markets were truly “capitulating” as many are looking for, highly speculative assets such as Bitcoin would likely not be showing such vibrant signs of life. While more price action is needed, an ascending triangle appears to be forming in BTC/USD. Should this formation materialize, higher prices may be ahead.

Bitcoin Four-Hour Chart

Chart created with TradingView

Like Bitcoin, Ethereum has remained postured well above its year-to-date lows at around $880. ETH/USD has been constrained to a much tighter range than Bitcoin, with price failing to materially break into a key pivot zone around $1400. Ethereum has largely struggled following the completion of “the merge” in September, with the network upgrade turning to be a “sell the news” event.

As the outlook for risk continues to deteriorate, market participants may continue to follow economic data closely as Fed policy appears to drive 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. While gravity continues to act forcefully on equities and bonds, crypto continues to defy the odds.

Ethereum Four-Hour Chart

Chart created with TradingView

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