Bitcoin and Ethereum have entered a correction that traders have been bracing for several weeks. Notably, the two most important recent crypto events were more negative than positive. Central banks (notably the Federal Reserve) have begun monetary tightening, which raises demand for safe assets like bank deposits and government bonds. Although global demand for Treasuries has fallen, yields have risen. In the future, investors could restore demand for these securities if the US government and other countries take steps to reduce budget deficits and sovereign debt. If capital flows back into debt markets, demand for Bitcoin will fall.

Separately, the Clarity Act regulatory bill has still not been passed and is unlikely to be reconsidered soon because the US is gearing up for Congressional elections. We should not expect any new votes before November, and outcomes will largely depend on election results. I remind you that even some Republicans opposed the Clarity Act in the Senate — getting the 60 votes needed for passage will be difficult for Donald Trump.

AI may accelerate attacks on crypto

Beyond the issues above, an independent group of researchers this week reported that artificial intelligence could breach the Bitcoin network and private wallet signatures within months rather than years as previously thought. Many experts have warned that a quantum threat exists, tied more to rising computing power and malicious intent than to AI specifically. However, AI could also facilitate hacks — not necessarily of the entire network, but of individual wallets — and quantum computers would not even be required. Investors have therefore been urged to shift into "bunker mode" — in short, store Ethereum and Bitcoin in cold wallets.

Researcher Justin Drake said most public keys for Bitcoin and Ethereum are openly accessible, and AI could help find ways for attackers to access wallets without quantum computation. Consequently, Bitcoin security could become a major headache for many investors. Previously, many experts argued Bitcoin was superior to gold because it was easier to store, move and use in daily life. It is now clear that any valuable asset demands a serious approach to custody security, and that responsibility falls squarely on each owner.

Trading recommendations for BTC/USD

Bitcoin is showing signs consistent with the start of a new bullish trend. Such trends often begin with a pump lacking clear, concrete fundamentals. The Federal Reserve has not started cutting interest rates, and the Clarity Act has not been passed. In the near term, on the daily timeframe, Bitcoin may fall because the price reacted to a bearish FVG and produced a sell signal. Traders should note that a breakout from the daily range could be a deviation — yes, a deep deviation, but still a deviation. If that is the case, Bitcoin could move toward $70,800 and even continue the downtrend that began last year. We believe short positions are more relevant in the near term.

Trading recommendations for ETH/USD

On the daily timeframe, the technical picture for Ethereum has completely changed in just a few days. Ethereum now points toward a new uptrend. However, bulls can only rely on the weekly chart for confirmation, where Ethereum appears to be heading for $4,800 — the upper band of a five?year sideways channel. On the daily chart, the first bearish FVG did not trigger a strong price reaction, while Bitcoin did react to its own FVGs, and recall that Ethereum's moves are roughly 80–90% correlated with Bitcoin. With Bitcoin correcting, Ethereum also turned down. Therefore, we still expect further declines in the near term. Ethereum targets may be around $2,300 and lower, potentially down to $1,850.

Comments on the charts

CHOCH is a change of character / break of the trend structure. Liquidity means traders' Stop-Losses that market makers use to build their positions. FVG stands for a Fair Value Gap (area of price inefficiency). The price often moves quickly through such areas, indicating the absence of one side in the market. Later, the price tends to return and react to these zones. IFVG is an Inverted Fair Value Gap. After a return to such a zone, the price does not react but impulsively breaks through and then tests it from the other side.

OB means an Order Block. A candle on which a market maker opened a position in order to harvest liquidity and then form their own position in the opposite direction.