VIDEO: Mid-Year Crypto Market Update

Welcome to Crypto Investing Daily. I am your host Alex Benfield, and today is Wednesday, July 10. We just finished up the long Fourth of July weekend. I trust you all had a good time and enjoyed a day or two off work.

I hope you weren’t staring at the charts all weekend because there’s been some movement in the crypto market—not exactly the kind of movement we wanted to see. Today, I will explain what’s going on with this continuing price correction.

As always, you can catch my full analysis in the video here or read the summarized version below:

Bitcoin Analysis

Let’s dive into the recent price movements of Bitcoin (BTC) and Ethereum (ETH), discuss whether or not to be worried, and how this recent leg of the correction affects our outlook for the next few months.

Bitcoin Price Movements

As you can see, Bitcoin continues to break down lower below the trend lines that we’ve been setting over the past few weeks. Last week, around Wednesday or Thursday, Bitcoin broke down below the recent uptrend connecting the recent lows. On Thursday, it actually broke down below the $58,000 level that we had been watching closely.

Bitcoin has now broken down below the May 1 low of $58,000, marking a lower low on the chart, which isn’t a great sign. This kind of cancels out any momentum Bitcoin had been building over the past few months, typically signaling a transition from a bullish market to a neutral market.

Current Situation and Historical Context

However, I think it’s a bit too early to make decisive calls on this recent correction. Bitcoin dropped below $58,000, went down to just under $54,000, and has been sitting between $56,000 and $58,500 for the last few days. Historically, in a bull market, Bitcoin undergoes five or more 30% corrections, as evidenced in the chart below. So far in 2024, we hadn’t seen a single correction come close.

The May 1st correction saw Bitcoin lose about 21% of its value from its March high. Now, from the $73,000 high to the low set this past weekend, Bitcoin actually corrected about 27% from the low wick and about 24% from the weekend close. This brings us closer to that 30% correction number, indicating that Bitcoin might be in the process of bottoming out right now.

Market Expectations

Over time, you’d expect those 30% corrections to reduce a bit. As the market matures, we won’t see Bitcoin drop 30% multiple times on its way to all-time highs. We’ll see something more stable, with corrections reducing from 30% to 25%, 20%, or even 15%.

I believe Bitcoin is in the process of bottoming out, at least it appears that way. It’s a bit too early to say, but this is exactly the type of trading behavior we see when Bitcoin is bottoming out. We saw similar patterns in November 2022 during the FTX period and in March 2020. Now, we want to see Bitcoin slowly building up over the next few days.

Ethereum Analysis

Let’s move on to Ethereum. Ethereum has lost some of the momentum and separation it had from Bitcoin over the past few weeks. The past two weeks showed a significantly better chart for Ethereum, largely due to the 20% green candle we saw on May 20 when we got the news of the spot Ethereum ETFs.

Ethereum Price Movements

However, Ethereum has since retraced a lot of that movement, and the chart looks less bullish. Key highlights are that Ethereum is still trading at $3,000, well above the low close it had at about $2,870. While it did drop over the past few days, it never closed below $2,927, holding above the May 14 low close. This is different from Bitcoin’s situation where Bitcoin has now registered a lower close.

Examining Ethereum’s March high and the low point of the recent wick, it actually drew down by 31%. If we go down to the close, it represents about a 28.25% correction, close to the 30% level.

So far to start the week, both Bitcoin and Ethereum have had green days on Monday and Tuesday, showing progress towards bottoming out. However, we’re a bit less confident in the market today than a week ago. This is not the time to enter new trades or exit current ones. We’re in a middle ground between neutral and bullish territory.

Upcoming Catalysts and Long-term Outlook

Prices could shoot up in the short term due to the Ethereum spot ETFs, rumored to open soon. Over the weekend, we saw almost every spot ETF applicant update their S-1 forms with the SEC, similar to what happened before the Bitcoin ETFs were released. If these ETFs open, we could see significant institutional demand for Ethereum, providing a boost to its price. Ethereum appears to be bottoming out, and a small catalyst like the opening of these spot ETFs could send prices higher.

Six-month Crypto Outlook

Let’s go over my six-month outlook on the crypto market and how recent events might have changed it. My base case assumption was that after Bitcoin hit $73,000 in March, things would cool off over the summer with range-bound trading. I expected range-bound trading above the $58,000 level for Bitcoin, and a slow buildup to the next leg of the bull market around mid-August to September. I expected Bitcoin and Ethereum to break their yearly highs around that period.

Due to recent price action, I’m now looking at a broader range from mid-August to October for Bitcoin and Ethereum to break their yearly highs. The delayed rate cuts from the FED have reduced market liquidity, impacting price action. If the FED lowers rates in the coming months, we could see liquidity flow into the crypto market, pushing prices higher.

Final Thoughts

Right now, both Bitcoin and Ethereum are showing signs of bottoming out, but it’s a bit early to call. We need to see more trading activity in the next few days. We’re in no man’s land between bullish and neutral territory. We should wait for clear evidence of prices moving in either direction before making any moves.

There might be opportunities for trades as we close out July, especially in the altcoin market. But for now, we need to see our market leaders, Bitcoin and Ethereum, make decisive moves. I’ll be watching the charts closely in the coming days. Until then, stay patient and enjoy your summer. Thank you, and I will see you next time.

Editor’s Note: Crypto is making ordinary investors rich, and it also serves as an inflation hedge. But you need to make your move now before the next leg-up in the crypto bull market of 2024. Every day you wait is literally costing you thousands in profits.

If you’re worried you can’t figure out crypto… don’t be. Our in-house crypto expert, Alex Benfield, will walk you through everything you need to know about crypto, step by step.

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