Bitcoin and Ether have been trading sideways for several weeks following a sharp jump. Over the past two weeks, both assets have moved in horizontal channels, and the higher timeframe technical picture allows for the possibility of a fresh leg lower. The US Treasury's decision to expand long-term bond buybacks sparked the crypto market rally, but questions remain about how long that move can last if it rests on a single supporting factor. The fundamental backdrop remains weak for the crypto segment, and downtrends in both Ether and Bitcoin have not yet been broken. We still see no grounds for a sustained advance. Sentiment around the crypto sector improved markedly in August, but traders should beware: this may be a pump or manipulation.

Meanwhile, Matt Pompiliano, chief investment officer at ProCap Financial, told investors that Bitcoin and AI stocks will be the best investment pairing over the next 20 years. He argued Bitcoin could begin a new bull trend driven by high US inflation, rising government debt, and policy responses designed to lower real borrowing costs—namely, actions by the Treasury and the Fed that reduce yields and stimulate the economy. Recall that President Donald Trump continues to call for lower Fed rates, while the US Treasury has begun buying its own long bonds to cap yields. Pompiliano said he expects high public spending to persist, and the government may try to reduce the real burden of debt via additional dollar issuance, which would further debase the currency and lift risk assets.

Pompiliano also suggested that Bitcoin could reach $1 million under an extreme negative economic scenario. If instead the US pursues a path focused on faster economic growth and production, AI could boost labor productivity and deliver the growth needed. He added that as the money supply expands, Bitcoin and other assets will inevitably appreciate.

Trading recommendations for BTC/USD

Bitcoin remains in a downtrend despite last week's strong rally. We continue to expect a decline toward $57,500 (the 61.8% Fibonacci retracement of the three-year uptrend), although that level has in effect already been tested. We do not believe the downtrend is over. The recent rise in Bitcoin looks only weakly like a corrective move and is not a solid reason to open longs; it resembles a pump. Liquidity may be taken off the $82,850 high, which could trigger a new leg lower and confirm a transition to a sideways channel. On the 4-hour time frame, we expect another downleg from the most recent bearish FVG.

Trading recommendations for ETH/USD

On the daily time frame, the technical picture for Ether has changed dramatically in just a few days. Ether may now be starting a new uptrend. However, traders should base positions primarily on the weekly chart, where Ether could head toward $4,800, the upper boundary of a five-year sideways channel. The nearest bearish FVG on the daily chart has been worked off, but that FVG sits within the prior trend and, if it triggers a reaction, it will most likely be corrective. We also note liquidity removal around the April 17 high and liquidity grabs on the 4-hour chart; Bitcoin has taken liquidity on the 4-hour chart as well. Thus, a correction is likely, and a flat has formed on the 4-hour Ether chart. Inside that flat, internal patterns carry limited weight; a deviation below the lower boundary could, paradoxically, provoke an upward move in Ether.

Explanations of illustration labels

CHOCH—a break in trend structure.

Liquidity—stop losses and pending orders market makers use to build positions.

FVG—an area of price inefficiency that price moves through quickly when one side is absent; price tends to return and react to such areas in continuation of the main trend.

IFVG—inverted fair-value gap. On return to such an area, the price does not react but instead breaks through impulsively and then retests from the other side.

OB—order block: a candle where a market maker entered to take liquidity and form a position in the opposite direction.