The major cryptocurrencies, including Bitcoin and Ether (alongside other risky assets) jumped higher on Thursday in reaction to lower-than-anticipated US inflation data. However, recent losses from the potential FTX collapse means that the outlook for cryptocurrencies remains negative.
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Major Cryptocurrencies Bounced Thursday
The major cryptocurrencies rebounded on Thursday (after recent, aggressive, and damaging losses, see below), as global riskier assets staged surging rallies with a lower-than-anticipated US inflation data print.
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The US Consumer Price Index (CPI) for October was 7.7%, down from 8.2% in September, with the Core CPI number (that excludes the volatile food and energy sectors) coming in at 6.3% versus 6.6% in September. These numbers also compare favourably to market expectations, with average consensus numbers for the CPI and Core CPI projected at 8.0% and 6.5%, respectively.
This sent riskier assets surging higher in a “risk on” rally that saw the S&P 500 rise over 5%, its best up day for over two years with the Nasdaq Composite surging over 7%.
The major cryptocurrencies, which have been positively correlated with risk assets throughout this year, also rebounded, with Bitcoin (BTC) up more than 10% and Ether (ETH) at one point rising over 20%
But Negative Signals for BTC and ETH Leave Risks Lower
Despite the strong gains across cryptocurrencies on Tuesday, these gains must be put into the context of recent price losses. The plunge in prices across the major cryptocurrencies in the past week has been driven by the potential collapse of one of the world’s larger cryptocurrency exchanges, FTX.
After Binance pulled out of a possible buyout of FTX, already weakened cryptocurrencies plunged lower again on Wednesday before Thursday’s rebound. The plunge lower in both Bitcoin and Ether saw moves below significant support levels, with BTC most damaged, pushing below the June bear market low at 17604, to 15585. The ETH move below the October low at 1192 to 1073, was a less damaging, but still a very negative development from a technical analysis perspective!
Bitcoin and Ether Negative Price Forecasts
With the basing/ bottoming patterns that have been developing from the summer damaged for both Bitcoin and Ether, the risk into November and year-end is now for further price erosion.
For BTC, the threat is for a bearish extension below the new low at 15585, to target 12555 and maybe 10000.
For ETH, the risk is skewed back to this week’s low at 10073, then quickly to the June/ July swing lows at 1006/997 and then the June bear market low at 880. Through here targets 775, maybe 660.
