The two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, appear to have entered a new uptrend despite news that the US economy has entered “technical recession“.
Bitcoin and Ethereum on the rise
Both Bitcoin and Ethereum enjoyed significant gains over the past few hours after the release of the latest US GDP figures.
Total cryptocurrency market capitalization increased by around $40 billion after reports that the US economy had contracted for the second consecutive quarter. The Bureau of Economic Analysis said US gross domestic product (GDP) fell 0.9% at an annualized rate.
With the US economy now technically in recession, bitcoin seems to be taking center stage. The flagship cryptocurrency has gained over 900 points in market value since the GDP figures were released. Now that Bitcoin’s bullish momentum has been affirmed, the flagship cryptocurrency is showing early signs of wanting to move higher.
Sequential Tom DeMark (TD) presented a sell signal on the chart in four hours. Although the bearish signal anticipates a retracement towards $23,260 or even $22,690, BTC is showing its strength by approaching $24,000. A four-hour candlestick close above this crucial resistance zone could invalidate the pessimistic short-term outlook and lead higher towards $25,500.
Similarly, Ethereum has seen a rally of almost 7% in the last six hours. This rise allowed ETH to break through an important resistance zone at $1,650. Now, TD’s risk line at $1,750 appears to be the next hurdle that ETH needs to overcome in order to advance further.
A decisive four-hour candlestick close above $1,750 could generate enough bullish momentum to push Ethereum towards $1,830 or even $1,900. However, ETH needs to hold above $1,680 to validate this bullish thesis. If not, it could trigger a profit-taking spike that pushes Ethereum back to $1,600 or even $1,550.
As macro conditions continue to deteriorate, market participants might believe that the latest US GDP numbers have been priced in. Negative growth could also force the Fed to move to looser monetary policy sooner than expected. Even with so much uncertainty in the global economy, it looks like cryptoassets are finding the strength to rally in the near term.