- Bitcoin, Ethereum are experiencing a local correction.
- The liquidation of long positions is weighing on the bull camp.
- However, long-term bullish catalysts are intact.
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Bitcoin, Ethereum are experiencing a short-term pullback after failing to break through new all-time highs. This decline can be attributed to investors liquidating long positions following the recent Federal Reserve meeting. However, the outlook for the cryptocurrency market remains bullish in the medium and long term.
One key factor supporting this bullish view is the potential for a loosening of monetary policy in the U.S. While the Fed is currently hawkish, a shift towards easing early next year could provide a significant boost to the crypto market.
Additionally, the highly anticipated launch of Ethereum spot ETFs in July is expected to generate substantial demand, similar to the bull run witnessed after Bitcoin ETF (TSX:EBIT) approval in January. This launch could propel Ethereum to new highs, potentially benefiting Bitcoin as well.
Bitcoin, Ethereum Correction a Buying Opportunity?
Looking at the current correction in more detail, the main driver appears to be the liquidation of around $420 million in long positions following the Fed meeting. However, this decline occurred on relatively low trading volume, suggesting it might be a corrective phase rather than a major reversal.
While Bitcoin and Ethereum are experiencing a short-term correction, the underlying fundamentals suggest a potential buying opportunity in the medium to long term. The upcoming Ethereum ETF launch and a potential shift in U.S. monetary policy could be key catalysts for renewed growth in the cryptocurrency market.
Bitcoin Still Moving Lower Within a Channel
After a failed attempt to breach the $72,000 supply zone, Bitcoin's valuation has fallen below $70,000, continuing its corrective movement within a descending price channel.
The first significant support level for Bitcoin lies in the $63,000 to $64,000 range. If this support is breached, the next target could be the medium-term low of around $57,000, established in early May.
Ethereum Poised for Potential Rebound Amid Double Bottom Formation
Ethereum's recent declines over the past three weeks have eased, stabilizing around the $3,400 mark, just above a critical support level. This price action has formed a potential double-bottom pattern, suggesting that the correction might be nearing its end and paving the way for renewed upward momentum
A breakout above the accelerated upward trend line will confirm this bullish scenario, potentially driving Ethereum toward new historical highs. However, if bearish forces push the price below the current support level, it could negate this pattern and trigger a further decline to approximately $2,900 per coin.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.