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▲ Ethereum (ETH)/ChatGPT Generated Image
Bitcoin (BTC) experienced a short-term correction, blocked by the 200-day moving average resistance on a daily basis. While some in the market interpret this as a signal of entering a bear market, a counterargument suggests it's a premature judgment that doesn't consider the difference in liquidity environments between the past and present. The recent price stagnation in the altcoin market, including Ethereum (ETH), should also be interpreted as structural pressure created by delays in the macroeconomic business cycle transition and liquidity contraction cycles, rather than a lack of individual foundation capabilities. Experts predict that the cryptocurrency market is passing through its final consolidation phase after the end of quantitative tightening, and Ethereum could rise to as high as $4,200 in conjunction with future improvements in macroeconomic indicators.
Dan Gambardello, host of the cryptocurrency-focused YouTube channel Crypto Capital Venture, stated in a video released on May 22 (local time) that “viewing Bitcoin hitting the 200-day moving average resistance as a bear market indicator is an error that ignores the macroeconomic context.” Gambardello explained that the liquidity conditions now are different from when Bitcoin sharply declined after hitting resistance in that range during the bear markets of 2018 and 2022. The resistance in April 2022 occurred just before the Federal Reserve (Fed) announced the introduction of quantitative tightening, reducing assets by $95 billion each month. In contrast, the current market has entered a new macroeconomic phase since the Fed's quantitative tightening officially ended in December last year.
Bitcoin is currently undergoing a short-term correction after failing its initial breakout within its price channel. Gambardello analyzed this as a mid-cycle consolidation process to move to the next upward phase. Even if further declines occur, the possibility of it leading to a crash like in the past is low. According to technical analysis, if downward pressure intensifies, Bitcoin could form a strong bottom in the early $60,000s or late $50,000s, where Fibonacci support lies. There is also a forecast that once the market completes its final bottoming around summer, a strong trend reversal rally could be triggered at a time many investors do not expect.
The stagnation in the Ethereum and altcoin markets, which has led to increased investor dissatisfaction due to a prolonged downturn, should also be viewed from a macroeconomic capital circulation perspective. While some point to operational shortcomings of the Ethereum Foundation as the cause of price stagnation, Gambardello sees it as the result of structural pressure weighing down the entire asset market. He explained that this is similar to the trend in traditional financial markets where the small-cap-focused Russell 2000 index, after suffering a downturn since 2021 due to high interest rates, only recently broke through overhead resistance and entered a price discovery phase. Ethereum has been going through a contraction cycle of over 1,600 days since its all-time high, including the aftershock adjustment from the end of quantitative tightening, and is now in the final stage where the compression of its circulating supply limit is concluding.
Based on past liquidity cycles, Ethereum's rebound scenario becomes clearer. When the Fed first ended quantitative tightening in July 2019, the cryptocurrency market did not immediately surge. It saw a lagging rebound, rising to the Fibonacci resistance level after about 140 days of further correction. The current global market is presented as a period where oil price stability due to easing geopolitical conflicts, the realization of inflation mitigation based on policy pledges from prospective US Treasury Secretary candidates, and the expansion of the manufacturing Purchasing Managers' Index (PMI) due to the artificial intelligence productivity revolution are all intertwined. Gambardello believes that these macroeconomic factors unfolding simultaneously could stimulate capital inflow into the cryptocurrency market.
The outlook is that if Ethereum definitively recovers and settles in the $2,400 to $2,500 range, where the weekly 20-week moving average and daily 200-day moving average are concentrated, depressed investor sentiment could quickly shift to optimism. Applying historical fractal structures, Ethereum's next upward target and key resistance level are suggested to be in the $3,700 to $4,200 range. If the energy accumulated during the summer unfolds, an analysis suggests that, contrary to the dominant market expectation of a year-end bottom, a bullish reversal phase attempting to break through all-time highs could unfold by the year-end cycle.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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