It is no surprise that we have maintained a bullish stance in crypto over the past month, given the uptick in US dollar liquidity and the easing tensions between Israel and Iran. Despite these factors, the market adopted a predominantly pessimistic view, highlighted by a negative futures funding rate. This suggested to us that the market was misaligned with the outside environment.

This past weekend, there was a brief spark of activity in the market. Ethereum, in particular, showed an unexpected surge, outpacing Bitcoin significantly. However, this did not trigger a broader market rally, and Ethereum eventually settled back to its levels before the weekend. This quick rise and fall appears to have been merely a false rally, as the market, with the exception of Ethereum, displayed no real strength. This is despite a strong performance in equity markets, particularly those considered risk-on, benefiting from improved liquidity conditions and reduced geopolitical tensions.

These factors might have boosted the crypto market altogether, but the environment following Bitcoin’s halving, along with substantial weekly outflows from Bitcoin spot ETFs, has offset these potential gains, leading the market to continued sideways trading. The minimal effect of what should have been a significant positive driver, combined with the fact that these positive factors are fading, reinforces our belief that the halving is a classic ‘buy the rumor, sell the news’ event, as outlined in Crypto Moves #22. Moving forward, we anticipate that Bitcoin will trend lower over the next month, while we expect Ethereum to outperform.