The week starts on a slightly bearish note for the cryptocurrency market. Bitcoin and Ethereum are seeing their prices pull back slightly in still uncertain technical contexts and in the face of difficult-to-decipher macro news.
Indeed, the past week has seen a shift in market expectations for the upcoming Fed meeting, with crypto traders no longer expecting the US central bank to hike rates next week.
The Fed remains a concern for Bitcoin and Ethereum despite the prospect of a pause.
However, this does not mean they foresee an end to the rate hike. Indeed, the CME's FedWatch tool shows a greater than 50% chance that the Fed will resume raising rates in July after the June pause.
Ultimately, this means that the Fed will keep rates high for longer than expected, keeping the crypto market under pressure last week.
This week, the rather calm economic calendar, and the "blackout" of Fed members who can no longer speak until the next FOMC meeting, could lead to an uncertain price environment.
We will, however, keep a watch on the three most crucial US numbers this week: the trade balance on Wednesday and Thursday, as well as the services ISM on Monday.
In the face of a fairly light macro program, the market's attention will turn more than usual to technical factors, which unfortunately offer little reason to be optimistic.
How to trade BTC and ETH from a technical perspective this week?
The price circumstances of Bitcoin and Ethereum are slightly different from a technical analysis perspective. However, neither cryptocurrency has offered convincing evidence to back a recovery.
Bitcoin remains stuck below a descending trendline
Regarding BTC/USD, let's recall that the cryptocurrency is currently under a downward trend line visible in daily data, stretching from this year's peak.
This line stopped a Bitcoin rebound on May 29 and is the starting point of the bearish phase that BTC is currently in. Currently, at $28,000, crossing this line is necessary for the profile of BTC to improve.
On the downside, Bitcoin traders should consider the first support formed by last week's low at $25,850 and the low at $26,000.
Ethereum sends a bullish signal leading to limited gains
As for Ethereum, the cryptocurrency crossed a major downtrend line on May 28. However, this bullish signal has led to very limited gains, as ETH/USD price met resistance near $1920.
Crossing this threshold makes it possible to target the zone formed by the psychological threshold of $2000 and by the top of May 6 at $2020. Finally, if the sellers take over, $1800 will be the first potential support for ETH, before $1760, then $1700/$1720.
Bitcoin Fails to Pick a Clear Direction in the Face of Conflicting News and Signals
The busy week about to end has resulted in a neutral balance on Bitcoin, which saw a bull day on Monday and then spent the rest of the week reversing its gains. , except for a slight rebound on Friday.
In the end, uncertainty is the main theme on BTC as the weekend gets underway. This gives us a chance to review the most recent major cryptocurrency news and the technical environment to determine whether investing in Bitcoin over the coming days is a good idea.
The neutral balance sheet on Bitcoin, despite a busy week
Recall that this week has been loaded with major economic events, including confirming the agreement on the US debt ceiling and a lacklustre NFP report on Friday.
Indeed, job creation exceeded expectations, which is negative, as this could encourage the Fed to raise rates further. Still, average hourly wages came out below the consensus, which is reassuring vis-à- vis the life with inflation and therefore "compensate" for higher-than-expected job creations. This detail undoubtedly allowed BTC to gain some ground on Friday.
Thus, the market is almost convinced that the Fed will not raise its rates at its next meeting on June 14. Indeed, the CME's FedWatch tool shows a probability of 74.7% of the status quo this Saturday morning and only 25.3% of a new rate hike.
Note that the market's current expectations oppose what was predicted a week ago when the market considered a further 0.25% rate hike as the most likely option, with a 64.2% probability.
This expectation reversal was partly responsible for Bitcoin's rise on Monday. Still, initiating a sustainable rise required more, and technical factors provide an explanation for it.
BTC/USD facing technical factors and conflicting signals
Indeed, on the daily Bitcoin price chart below, we can observe that a downtrend line stretching from this year's high at $31,035 on April 14 blocked Monday's rise.
Currently, this trendline, located at around $28,300, represents the first significant hurdle for the crypto, and crossing it should be interpreted as a signal to buy Bitcoin. Higher, the psychological thresholds of $29,000, $30,000 and $31,000 will be the next targets.
On the downside, the region created by this week's low of $25,800 and the psychological threshold of $26,000 is the first significant support for the cryptocurrency. A breach beneath this crucial support would be a warning indication. Prior to the 200-day moving average ($23,150), the significant psychological hurdle of $25,000 will then come into focus.