Below are the weekly charts of BTCUSD (left) and ETHUSD (right). Both cryptocurrencies have charted a lower peak (LP) and a lower trough (LT). This pattern implies that they are in a defined downtrend, as per classical technical analysis. Since the week ending 22 January, price action shows that both bitcoin and ethereum have been moving in a sideways pattern. The bitcoin pattern is more ordered, but both appear to be smaller pennant continuation patterns (converging turquoise lines) until proven otherwise. I.e., if these are continuation patterns, their completion will mean further downside. Since the invasion of Ukraine by Russia and the imposition of sanctions, there has been heightened trade in cryptopairs involving the ruble. There are notable spikes on the 24 and 28 February. This market action had led to thinking that Russia may use the crypto markets to bypass imposed sanctions. While there is a possibility that this is the case, the crypto markets don't have enough liquidity to make this a meaningful escape from sanctions. Moreover, most liquidity passes through compliant exchanges such as Binance, Coinbase, etc. These established exchanges have compliance programs that utilises advanced software and compliance officers, which will make bypassing sanctions a challenge (cnbc.com).
The daily charts below have Bollinger bands as an overlay to measure sentiment. BTCUSD (left) has dropped from the bullish area, between the upper blue and red bands, into the neutral zone between the two blue bands. ETHUSD (right) initially moved from the weak spot, between the lower blue and red bands, into the neutral area between the blue bands. However, this positivity is waning, and the current price threatens to move back into the weak zone. This price action suggests that the momentum now seems to be waning after the initial drive that supported both bitcoin and ethereum.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.