BTC looks to record highs on a weaker USD. Can ETH finally break out?

Having recovered around 10% over the past four sessions, Bitcoin is currently hovering around 107.5k. The price has made several attempts on 108k in recent days, an important level to watch. 

Geopolitical fears have calmed as the Iran-Israel ceasefire continues to hold, allowing investors to refocus on more supportive factors, such as a weaker USD, strong institutional demand, and regulatory tailwinds. 

USD dives 

The USD has fallen to its lowest level since April 2022 versus a basket of major peers, pulled lower by rising expectations for Federal Reserve rate cuts. 

President Trump is reportedly considering nominating Fed Chair Powell’s replacement months early, in a move that could undermine Powell’s position. Trump has made no secret of his preference for lower interest rates, and his replacement for Powell will almost certainly be more aligned with this preference for looser monetary policy. As such, the market’s outlook for future rates could be swayed. 

Federal Reserve Chair Powell also adopted a slightly more dovish stance in his testimony before Congress this week. While Powell warned over potential inflationary pressure from Trump’s tariffs, he also said that if it didn’t materialise, the Fed could continue cutting rates.  

The market lifted rate cut expectations to 66 bps by the end of the year, up from 51 just a week earlier. 

Bitcoin often performs well in a lower-interest-rate environment and when the USD is weaker. 

BTC ETF demand soars 

Bitcoin institutional demand is also supporting Bitcoin gains this week. According to SoSo, value BTC ETFs have recorded a 12th straight day of net inflows. This week’s net inflows have totaled $1.49 billion, a level that was last seen at the end of May when BTC reached an all-time high. Should BTC ETF inflows continue, BTC could break out to fresh record highs. 

Corporate demand for Bitcoin also continues to grow. Meta Planet announced a further purchase of 1,234 BTC taking its total holding to 12,345 BTC.  

Meanwhile, in line with making the US the crypto capital of the world, the Director of the Federal Housing Finance Agency, William Pulte, announced that Freddie Mac and Fannie Mae are preparing their businesses to count cryptocurrency as an asset for mortgage purposes. This is just the latest example of how Bitcoin’s legitimacy is being boosted almost daily. 

 Can ETH break out? 

Ethereum has risen over 15% from its Sunday low, recovering from losses caused by geopolitical tensions in the Middle. The ceasefire between Israel and Iran sparked a relief rally across global markets.  

Ethereum led the charge among major altcoins and could be preparing for a breakout above the 2800 level. The price remains over 50% down from its ATH, suggesting that it could be undervalued. 

In a show of support for the second-largest cryptocurrency, Bit Digital, the Bitcoin miner has announced a pivot away from Bitcoin mining to become a pure-play ETH staking and treasury company. 

ETH technical analysis 

ETH fell out of its recent range dropping to a low of 2110 on Sunday before recovering higher to current levels at 2500. The price trades within an ascending triangle pattern. Buyers will need to rise above the 200 SMA at 2580 to extend gains towards 2750, the horizontal resistance of the triangle. A break out above this level and 2800 could see ETH rise towards 3000. 

However, failure to retake the 200 SMA could see a retest of 2450 support, the 38.2% Fib retracement level. A break below here could spark a deeper selloff to 2200 to test the rising trendline support. 

Open free account

Trading involves risk.