Short-Term Crypto Correction Moves Into Final Phase

Macro vs Technicals
Global data, but in particular the US and European CPI and PMI data, has remained strong, with a pick-up in Chinese PMI data supporting the re-opening story there. As such, US and European yields continue to push higher, but, so far, this has not translated into an aggressive equity sell-off. Downside risks remain for equities and crypto, with Silvergate an extra headwind for the latter. This should see Bitcoin and Ethereum extend to the ideal target regions. 

Ethereum vs Bitcoin
No change. The cycle structures highlighted below show that Bitcoin and Ethereum should overall work in tandem and we should therefore remain in the current range. However, while range support holds my studies have been biased for XET to out-perform in this process, which has been the case and should remain so (Blue lines depict the current range).

Ethereum
The short-term correction from 1742 is ongoing and moving into the next phase, which targets the previous 4^th wave and Fibonacci support in the 1486 region. However, it is unclear whether that will complete the correction and we move back into the underlying bull trend, or the move is part of a more complex correction. My studies are biased to the latter, but we should still see a recovery from that area.

From a long-term perspective, the decline from the 2021 high at 4866 completed a bear cycle at 880 in June 2022. Since then, we have seen a significant recovery, the most recent leg from the November 2022 lows reaching 5^th wave projection targets around 1742. Once the current correction is complete, we should resume the reversal from last year and see a move up to test the 2020 reaction highs and then onto 2450 longer-term targets.    

Bitcoin

The short-term correction has pushed into the next phase this week. Ideally we should still see this phase test below the previous 4^th wave around 21,510, but then we should see signs of a base developing between there and 50% Fibonacci support in the 20,365 region. What isn’t clear yet, is whether that completed the correction from the highs, or part of a more complex correction phase. My studies are biased to the latter at the moment. Either way, in the week ahead, if we test into that support it is a place to close shorts and turn either neutral or a small long.

From a long-term perspective, the bear cycle from the 2021 highs completed last year at 15,574. We staged an impulsive recovery from that low, which completed a 5-wave cycle exactly at projection resistance, which was aligned with the pivot resistance going back to May 2022. Once the current correction phase is complete, the reversal from last November should continue, with a move up towards 33,000. 

Robin is a global market veteran, with over 30 years of experience on the sell and buy-side, as a strategist and trader. He now provides strategic trading and investing advice to hedge funds, family offices, HNW individuals and trading desks around the globe.

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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)