LiveWire

Bitcoin dropped overnight on increasing recession fears and cautious risk sentiment ahead of a busy week packed with Big Tech earnings and the Fed's interest rate decision, the FOMC meeting on Wednesday and inflation data on Friday. Bitcoin is now approaching its short-term support level at around USD21'700. So far, the momentum seems to be holding up and the largest crypto by market cap is showing encouraging signs that it could recover further from its historic fall this year.

Ethereum has rallied more than 60% from its lows amid good news for the Merge and recovering market sentiment. It broke past its resistance and is now targeting USD1'700 as its next resistance to break-through. 

Market sentiment improved a great deal as markets looked past Apple slowing hiring. Earnings are resilient and the dollar weakness is encouraging as dollar strength is mentioned as a major headwind during earnings call. Bitcoin broke above USD22'300 in encouraging signs for more gains ahead. The next resistance is around 23k. Similarly, crypto stocks including COIN (+7%) and SI made large gains. SI jumped 19% on a strong earnings report. 

Ethereum climbed 22% since its July 12th lows, with 13% of gains today alone soaring past USD1'200, on hopes for the upcoming Merge. A recent test was successful and the Merge event can be expected for August although the exact timeline remains unclear. Meanwhile, the Nasdaq is soaring 0.8% in pre-market thanks to better-than-expected retail sales and after Fed official, Bostic made comments implying 75bps rate hike is in play for July, as opposed to 1%.

The largest crypto is trending lower, hovering around USD20k, ahead of the important US inflation reading on Wednesday. Traders cannot agree on the trend for Bitcoin, and sentiment readings indicate the coin is oversold, with many expecting it to break down lower, reflecting the pessimism in the crypto industry. Looking at it over the medium to long-term, after such a steep fall from to bottom (drawdown), the chances for the coin to stabilize or recover gradually from here are increasing. However, it is becoming increasingly clear that crypto is highly correlated to the market risk appetite, which has been crushed by the aggressive tightening measures taken by the US central bank.