Bitcoin and Ethereum have been trading in sideways channels for several weeks after a rapid rally. However, that absolutely does not mean the downtrend that began last year has ended. On the daily timeframe, Bitcoin is range-bound between $60,000 and $82,500, while the weekly timeframe still shows a downtrend. So, no matter what people say, we do not believe a new "bull" market has started. Besides, most analysts still refer to the four-year cycle, under which Bitcoin should finish its downward correction this autumn and begin a new bull phase. But the four-year cycle is not the Great Pyramid — it's not eternal. Many so-called "experts" constantly predict Bitcoin's rise regardless of world events, investor interest, or fundamentals. For example, the Fed could tighten policy as soon as next week, which is a bearish factor for the crypto market. Yet none of the pundits seems to mention this — everyone is simply "waiting" for growth.

Meanwhile, Coinbase CEO Brian Armstrong said Bitcoin could reach $400,000 by 2030. Armstrong called that figure a "reasonable target." On what basis should Bitcoin show such a wild rise? To answer, the Coinbase chief listed the usual factors echoed by crypto enthusiasts: adoption of the Clarity Act, high US government debt, a large budget deficit, dollar depreciation, and monetary expansion. Thus, most analysts expect Bitcoin to rise not based on a real increase in demand for the primary cryptocurrency, but because of a growing money supply, a weaker US dollar, and declining trust in government institutions and fiat currencies. In other words, demand would rise simply because trust in governments and central banks is waning while the amount of money in the global economy is increasing. By the same logic, one could say all investment instruments would rise — real estate or equities, for example.

In our view, recent years have shown that periods of hundreds-percent gains within a bull cycle are largely behind us. We admit a new uptrend could begin soon since monetary expansion is plausible. Yet we do not consider that a strong reason to increase allocations to the crypto sector. At the moment, Bitcoin is closer to a new decline than a continuation of the rise.

Trading recommendations for BTC/USD

Bitcoin continues to follow a downtrend despite the strong rally a week earlier. We still expect a drop to $57,500 (the 61.8% Fibonacci retracement of the three-year uptrend), although that level has effectively already been tested. We do not believe the downtrend is over. The current rise in the leading cryptocurrency looks weak for a corrective move and is not a solid case for opening longs. Liquidity may be swept from the $82,850 high, which could trigger a new leg down. On the 4-hour chart, a further decline is also possible after two liquidity sweeps from recent highs (deviations). We think a fall to $75,500 is quite likely. After that either a deviation and renewed rise, or a breakout of the channel and a new leg down toward $50,000.

Trading recommendations for ETH/USD

On the daily timeframe, Ethereum's technical picture changed dramatically in just a few days. Ethereum may now be able to start a new uptrend. However, traders should rely primarily on the weekly chart, where ETH could head for $4,800 — the upper boundary of a five-year sideways channel. On the daily chart, the nearest bearish FVG has been filled, but that FVG belongs to the previous trend; if it triggers a market reaction, it will likely be corrective. Also note the liquidity sweep of the April 17 high and liquidity removal on the 4-hour chart. Bitcoin likewise swept liquidity on the 4-hour chart and remains in a wide sideways channel. Thus, Bitcoin is currently biased lower on both timeframes. If a decline begins, Ethereum will likely follow.

Comments on the charts

CHOCH is a change of character / break of the trend structure. Liquidity means traders' Stop-Losses that market makers use to build their positions. FVG stands for a Fair Value Gap (area of price inefficiency). The price often moves quickly through such areas, indicating the absence of one side in the market. Later, the price tends to return and react to these zones. IFVG is an Inverted Fair Value Gap. After a return to such a zone, the price does not react but impulsively breaks through and then tests it from the other side.

OB means an Order Block. A candle on which a market maker opened a position in order to harvest liquidity and then form their own position in the opposite direction.