• Bitcoin took a hit by a wave of risk aversion in markets

• But it quickly bounced back as traders bought the dip

• Ethereum completes death cross on the daily chart

Bitcoin recoups losses

Cryptocurrencies plummeted on the back of a broader selloff in risk sensitive assets, triggered by concerns over the health of the US economy after the latest downbeat NFP report. Last week, the crypto market suffered its worst weekly performance since the FTX collapse in 2022. Nevertheless, it has been staging a turnaround since Tuesday as investors appear eager to buy the dip amid improving risk sentiment.

The latest movements in cryptocurrencies have reaffirmed their positive correlation with stocks and challenged their supposed safe-haven status. However, this could be short-lived since correlations often strengthen during crises as investors liquidate winning positions to cover losses or meet margin calls.

Meanwhile, the recent volatility has once again debunked the notion that Bitcoin is immune to stress in the traditional financial system. Instead, the latest fluctuations have been primarily driven by government selling and changes in the macroeconomic landscape.

Ethereum posts death cross

The second-largest cryptocurrency by market capitalisation came under severe selling pressure last week, shedding almost 20% of its value before recovering some ground. After the latest selloff, Ethereum is trading almost flat in the year, massively underperforming against Bitcoin. Moreover, it completed a ‘death’ cross on the daily chart for the first time since September 2023, which clearly indicates a bearish turn in its short-term outlook.

Clearly, Ethereum has been losing market share against Bitcoin as the launch of the much-anticipated spot-Ether ETFs has failed to attract the expected institutional inflows. Nevertheless, this could just be a temporary phenomenon due to a sell-the-fact type of reaction or even a tilt towards the big name of the crypto industry in the face of the recent stress.

BTCUSD faces congested region

BTCUSD experienced a vast selloff, falling below the $50,000 mark for the first time since February 14. However, the price managed to find its footing and recoup a significant part of its losses, with the bulls challenging the congested region that includes the diverging 50- and 200-day simple moving averages (SMAs) on Friday.

Should the price break decisively above this strong hurdle, the July resistance of $63,800 could curb initial advances. Higher, the bulls could test the April resistance of $67,270.

On the flipside, if the price reverses back lower, the March-April support of $59,600 could act as the first line of defence. A violation of that zone may pave the way for the May low of $56,483.