Here’s What the Charts Suggest Happens Next

The cryptocurrency market is not buying what the Fed is selling. Despite the Federal Reserve announcing a widely expected 25 basis point interest rate cut on Wednesday to a range of 3.5%-3.75%, both Bitcoin and Ethereum posted losses, with the broader cryptocurrency market at $3.07 trillion, down 2.25% from yesterday.

While traditional markets rallied on the news, cryptocurrencies took a different path. The S&P 500 closed up 0.67% and the Nasdaq rose 0.42%, but the value of digital assets fell sharply. The disconnect may indicate that traders are reassessing future liquidity conditions despite lower borrowing costs.

According to CoinMarketCap, around 90% of cryptocurrency markets are in the red today, with some near the top 10 by market capitalization suffering double-digit losses.

So what’s going on behind the scenes? Let’s analyze what the chart tells us:

Bitcoin is trading at $89,977, down 2.24% in the past 24 hours. Prices reached highs of $92,103 before sellers stepped in, pushing BTC back towards the psychologically critical $90,000 level and confirming our previous analysis: the recent rally was not a trend reversal and could just be a spike in a broader bearish movement.

Price action continues to follow the downward trendline that has been in place since the October peak around $126,000. Now, that peak is a distant memory as Bitcoin struggles to hold on to the psychological support level of $90,000.

Let’s talk technicals: Bitcoin’s relationship with its exponential moving average (EMA) suggests that price action remains in death cross territory. EMA takes the average price of an asset over the short, medium and long term and helps traders determine the direction of the trend by smoothing that price movement.

When the faster-moving 50-day average price falls below the slower 200-day average price, it forms what traders call a death cross pattern, which usually signals bearish momentum.

Currently, Bitcoin is trading well below its 50-day and 200-day average prices. BTC’s recent upward momentum was rejected as it broke above the 50-day EMA and was unable to break above the downtrend line around $100,000.

The relative strength index (RSI) is 44.23. RSI measures momentum on a scale of 0 to 100, with a reading below 50 indicating that selling pressure is greater than buying pressure. Bitcoin is trading at 44, and while it’s not oversold enough to attract aggressive bargain hunters, it’s clearly in bearish territory. Traders typically watch for the RSI to drop below 30 (deeply oversold) before betting on a rebound.

The Average Directional Index (ADX for short) measures the strength of a trend, regardless of direction. A reading above 25 indicates the trend is real and sustainable; a reading below 20 means the market has no direction. Bitcoin’s ADX is at 28.15, confirming that this downtrend is strong and sellers are in control.

All things considered, though, Bitcoin supporters still appear to be quite optimistic. On Myriad, a DecryptAccording to Dastan, the parent company of Myriad, 69% of funds betting on Bitcoin’s next move are bullish: Most Myriad traders still believe that BTC is more likely to reach $100,000 before falling to $69,000.

Even more telling: Myriad Markets questions whether “crypto winter is coming”, with traders giving a 90% chance of saying “no”. In other words: Traders are being shaken by volatility, but long-term conviction remains surprisingly strong.

Ethereum is having a tougher time, falling 4.40% to $3,178.8 today. The second-largest cryptocurrency by market capitalization opened at $3,324.3 and continued to lose about $146.2 throughout the session, hitting a low of $3,146.4 before stabilizing slightly.

Ethereum’s move almost set up a golden cross scenario – the opposite of a death cross – but it failed.

Unlike Bitcoin, ETH was able to break above its immediate resistance (the white dotted line in the chart above) and even the EMA50, but was unable to break above the EMA200 line. This is a problem. This suggests that despite Ethereum’s brief display of strength, the long-term bearish structure remains intact. In order to form and sustain a golden cross, you would need a clean break above the 200-day moving average and then multiple closes above it. We don’t understand.

Ethereum’s RSI is 51.24 – technically in neutral territory, but barely holding on. It’s like flipping a coin: Momentum alone has no decisive advantage for either bull or bear. Traders generally consider an RSI above 70 to be overbought (time to take profits) and below 30 to be oversold (time to buy on dips). At 51, Ethereum is stuck in no man’s land.

Like Bitcoin, many of Ethereum’s technical strategies are consistent with bearish setups, with a bearish score of -41%. The Ichimoku cloud is red and expanding, the price is heading down a descending channel, and the volume distribution chart shows that most trading activity is concentrated at higher levels, which means many holders are underwater.

Interestingly, the disconnect between price action and prediction markets appears again. On Myriad, sentiment is turning cautiously bullish. The market, which asked traders to predict Ethereum’s next move – a rise to $4,000 or a fall to $2,500 – is now showing 50-50 odds – a dramatic shift from late November, when 90% of funds were bet on $2,500.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.