Can Bitcoin and Ethereum recover from a disappointing week?
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Can Bitcoin and Ethereum recover from a disappointing week?
This article summarizes key points of the cryptocurrency market, including major agendas, news updates, economic conditions, sentiment indicators and capital flows, as well as technical analyses of Bitcoin and Ethereum.
Navigating Web3 tides with focused insightsAuthor: Matt Weller CFA, CMT
Translation: Baicai Blockchain
1. Key Points for BTC/USD and ETH/USD
Kamala Harris’s economic agenda is seen as potentially inflationary, which could benefit crypto assets while weakening the US dollar if she wins the election.
Last week’s data highlighted a shift in market focus from inflation to labor markets and consumer health. BTC/USD continues to trade within its recent range, while ETH/USD maintains a bearish technical outlook following a breakdown below key support.
2. Crypto Market News
The application for spot Bitcoin ETF options has finally drawn renewed attention, with many expecting such products to launch before November. The Swiss National Bank disclosed holdings of 466,000 shares in MicroStrategy. Goldman Sachs also revealed $418 million worth of Bitcoin ETFs in its portfolio. Meanwhile, the US government transferred 10,000 "Silk Road" Bitcoins—worth around $590 million—from one wallet to another, possibly signaling the start of another round of long-dormant supply entering the market.
While not strictly crypto news, Democratic presidential candidate Kamala Harris unveiled her economic agenda last week. Many of her priorities are viewed as “populist,” including eliminating medical debt for millions of Americans, banning food price gouging, capping prescription drug prices, offering $25,000 subsidies for first-time homebuyers, and expanding the child tax credit. Many analysts believe these policies could be inflationary, potentially benefiting crypto assets while pressuring the US dollar should Harris win the presidency.
3. Macroeconomic Context
Last week’s economic data underscored a notable shift in narrative—one that regular readers may already have anticipated. On the surface, the most influential release was Wednesday’s US Consumer Price Index (CPI) report, offering an early look at price pressures in the world’s largest economy during July. Year-over-year inflation came in at approximately 2.9% (core CPI at 3.2%), broadly in line with expectations. Markets reacted mildly, as traders no longer view inflation as the primary risk to the economy or Federal Reserve policy.
Instead, attention has pivoted toward labor markets and consumer health. Thus, Thursday’s stronger-than-expected retail sales report—alongside robust earnings from retail giant Walmart—eased concerns about an imminent economic slowdown. This development sharply reduced the expected number of Fed rate cuts this year to less than 100 basis points (or 1%). All else equal, these conditions should support risk assets like Bitcoin and Ethereum, yet last week’s price action clearly disappointed bulls (details below).
4. Sentiment and Fund Flows
Our closely watched sentiment gauge, the "Crypto Fear & Greed Index," dipped to 27 last week. Overall, it remains near the one-year low set earlier this month, potentially forming a contrarian bullish signal should positive developments emerge in the coming weeks:
Source: Alternative.me
Another way to assess sentiment is through fund flows into exchange-traded crypto investment vehicles. Last week remained lukewarm. At the time of writing, and ahead of Friday’s data release, Bitcoin ETFs saw a slight outflow of -$3.5 million over the past four days. Over the longer term, inflows from "traditional finance" investors continue to provide gradual demand for Bitcoin, helping underpin prices.
Source: Farside Investors
In the meantime, outflows from Ethereum ETFs—particularly from Grayscale’s higher-fee traditional product (ETHE)—have begun to slow slightly. These outflows have already reached nearly 30% of the fund’s total assets in just three weeks and may continue in the coming weeks until asset levels align more appropriately with its fee structure.
5. Bitcoin Technical Analysis: BTC/USD Daily Chart
Source: StoneX, TradingView
Despite impressive recoveries in other risk assets such as US equities and gold, Bitcoin struggled to gain momentum last week. BTC/USD also experienced a "death cross," where the 50-day exponential moving average (EMA) fell below the 200-day simple moving average (MA), suggesting a potential bearish shift in the long-term trend.
The cryptocurrency has been consolidating within a broad range since March. Short-term momentum now appears neutral, while the longer-term bias remains cautiously constructive. However, a break below $53K could cast doubt on this bullish outlook.
6. Ethereum Technical Analysis: ETH/USD Daily Chart
Source: StoneX, TradingView
Like Bitcoin, Ethereum showed relative weakness last week. ETH/USD also formed its own "death cross" and traded below its previous Q2 range, leaving the second-largest cryptocurrency with a notably less optimistic technical picture. ETH/USD continues to trade well below its 200-day moving average and key resistance-turned-supply level at $2875, maintaining a short-term downward bias.
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