FX.co ★ Cryptocurrency market provides another important signal

Yesterday, Bitcoin stopped declining and recovered slightly to the $112,000 area. Recently, active selling during US trading sessions has clearly dampened optimism among traders counting on further market growth. Ether also recovered slightly.

Meanwhile, Glassnode is warning that the current bullish phase of the cryptocurrency market is increasingly showing signs of ending. Data indicates that long-term BTC holders have already realized greater profits in this cycle than in any previous cycle, with the exception of the bull market period of 2016–2017. This indicates increased selling pressure.

Despite this, overall market sentiment remains moderately optimistic. Institutional investors continue to show interest in Bitcoin, albeit not as actively as before. This creates a counterbalance to the pressure coming from long-term holders locking in profits.

The macroeconomic environment should also be considered. Inflation is declining, which means that rates will also go down, giving access to cheaper money. Where will the excess funds go? Naturally, into risk assets, including Bitcoin and Ether.

In addition, technological progress in the blockchain industry cannot be ignored. Improvements in scalability, security, and functionality of blockchain networks are making cryptocurrencies more attractive for a broad range of users and businesses. Furthermore, decentralized finance is playing an increasingly important role. DeFi platforms offer alternative financial services such as lending, borrowing, and trading, which are often more efficient and accessible than traditional financial institutions. The growth of DeFi contributes to onboarding new users into the cryptocurrency ecosystem and increases demand for cryptocurrencies used as collateral or for participation in DeFi protocol governance.

In the short term, continued volatility in the Bitcoin market is likely. However, in the long term, fundamental factors such as limited supply, expanding adoption, and inflation expectations continue to support Bitcoin's price. Approval for USF pension funds to invest in Bitcoin and other crypto assets will also be an important bullish driver in the medium term.

Trading recommendations:

As for the technical picture of Bitcoin, buyers are currently aiming to retake the $112,100 level, which would open a direct path to $113,700, and from there the $116,000 level is within easy reach. The most distant target is the high in the $117,500 area. Breaking through this mark would confirm the strengthening of the bull market. In the event of a decline, buyers are expected at $110,500. A return of the instrument below this area could quickly drive BTC down to $108,800. The most distant downside target would be the $106,100 area.

Regarding the technical picture of Ethereum, a clear consolidation above $4,641 opens a direct path to $4,807. The most distant target is the high near $5,055. A breakout above that would confirm the strengthening of the bull market and a rise in buyer interest. If Ether declines, buyers are expected at $4,477. A move below this level could quickly send ETH to the $4,347 area. The most distant target on the downside would be $4,215.

What we see on the chart:

Red lines indicate support and resistance levels from which a slowdown or active price growth is expected at the moment;Green lines represent the 50-day moving average;Blue lines represent the 100-day moving average;Light green lines indicate the 200-day moving average.

The crossing or testing of moving averages by the price typically either halts the market or sets new momentum.