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Bitcoin, Ethereum Forecast: BTC/USD Probes Record Highs, ETH/USD ETF in Focus

Article By: ,  Head of Market Research
May 23, 2024 11:49 PM

Bitcoin, Ethereum Key Points

  • The Biden Administration has turned pro-crypto overnight, boosting the odds of a spot ETH ETF approval later today.
  • Bitcoin remains in a bullish long-term technical position, with potential for a bullish breakout at $72K or $74K.
  • After a big surge this week, Ether may be vulnerable to either a rejection of ETH ETFs or a “buy the rumor, sell the news” reaction to an approval.

If you’re like me, you’re dreading the constant, excessive US election coverage that will inevitably take over the newswires this summer and into the fall. While the market and trading implications of the election are generally overplayed, there are key situations where politics can have a direct, dramatic impact on markets, and that’s exactly what we’re seeing in the cryptoasset market this week.

In an apparent 180-degree turnaround to capture young voters, the Biden Administration has seemingly shifted in favor of cryptoassets this week. Yesterday, the House of Representatives approved the Financial Innovation and Technology for the 21st Century (FIT21) Act in a bipartisan vote. The bill could setup a new regulatory framework for digital assets with greater involvement from the (relatively) more crypto-friendly Commodity Futures Trading Commission’s (CFTC).

Meanwhile, after months of refusing to engage with potential issuers, the Securities and Exchange Commission (SEC) came to the table with firms looking to launch a spot Ether ETF, prompting analysts at Bloomberg to upgrade their estimate of an approval from 25% to 75%. As with the spot Bitcoin ETF, the approval of a spot Ether ETF would open ETH/USD to a vast pool of regulated capital that has so far been prevented from investing in the world’s second-largest cryptoasset. A formal decision is expected later today, likely around 4:00pm ET if January’s Bitcoin ETF approval is any indication.

Bitcoin Technical Analysis – BTC/USD Daily Chart

Source: TradingView, StoneX

Bitcoin surged to record highs above $73K in March, riding the post-November risk-on wave that drove big rallies in global stock indices as well. Since then, the oldest cryptocurrency has generally marked time in the $60-$70K zone, correcting the big Q1 surge through time rather than through a deep price correction.

Moving forward, a key question for Bitcoin will be whether we view the past two months of price action as a bullish flag (green in the chart above) or a broad sideways range (purple); depending on your view, the key area to watch for a bullish breakout is either this week’s high near $72K or the all-time record high closer to $74K. Either way, Bitcoin’s price action remains generally bullish on a longer-term timeframe, with traders likely to buy dips toward the 100-day MA in the mid-$60K area as they await a breakout to record highs. Only a drop below the 2024 low at $56K would call that longer-term bias into question.

Ethereum Technical Analysis – ETH/USD Daily Chart

Source: TradingView, StoneX

Ether, the token of the Ethereum network, has lagged its big brother throughout most of the year so far (and indeed since Q4 2022!), but this week’s price action may mark a potential inflection point. ETH/USD’s 25% rally so far this week has dramatically outperformed Bitcoin, though the near-term risks may be shifting to the downside. Obviously if the spot ETH ETF are NOT approved, Ether could be vulnerable to unwinding the week-to-date rally, but even if the good news emerges as expected, traders could still look to take profits in a short-term “buy the rumor, sell the news” reaction.

In terms of key levels to watch, short-term support may emerge at previous resistance levels from March and April, including $3675 and $3300. Overhead, the multi-year high at $4100 is the key level to watch for a potential bullish breakout or near-term bullish target.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

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