Decentral Block Post

Price action across the cryptocurrency market was largely subdued on July 21, as traders took a day to digest gains over the past week and book profits following the biggest relief rally since early June.

Amid speculation about what drove the recent rally, the Ethereum Merge has consistently ranked at the top of the list. The market rally shifted into high gear after a tentative date of Sept. 19 was set for the mainnet Merge.

Data from Cointelegraph Markets Pro and TradingView shows that after hitting a high of $1,620 on July 20, Ether's (ETH) price retraced to a low of $1,463 in the early trading hours on July 21 and has since climbed back above support at $1,500.

Now that the initial price surge brought on by the Merge announcement has subsided, here’s what several analysts are expecting to unfold as Ether's mainnet transition to proof-of-stake approaches. 

A healthy pullback

Ether's pullback on July 21 is a positive development according to market analyst Rekt Capital, who posted the following chart highlighting the importance of its weekly close above $1,300 and subsequent move higher.

Bitcoin (BTC) briefly broke above $24,000 on July 20, but the excitement lasted less than two hours after the resistance level proved more challenging than expected. A positive is that the $24,280 high represents a 28.5% increase from the July 13 swing low at $18,900.

According to Yahoo Finance, on July 19, Bank of America published its latest fund managers survey, and the headline was "I'm so bearish, I'm bullish." The report cited investors' pessimism, expectations of weak corporate earnings and equity allocations at the lowest level since September 2008.

The 4.6% advance on the tech-heavy Nasdaq Composite Index between July 18 and July 20 also provided the necessary hope for bulls to profit from the upcoming July 22 weekly options expiry.

Global macroeconomic tensions eased on July 20 after Russian President Vladimir Putin confirmed plans to reestablish the Nord Stream gas pipeline flow after the current maintenance period. However, in the course of the last few months, data shows that Germany has reduced its reliance on Russian gas from 55% to 35% of its demand.

Bears placed their bets at $21,000 or lower

The open interest for the July 22 options expiry is $540 million, but the actual figure will be lower since bears have been caught by surprise. These traders did not expect a 23% rally from July 13 to July 20 because their bets targeted $22,000 and lower.

Cardano (ADA) has dipped this July 21 as the market favors mounting selling pressure around its most reliable resistance levels in 2022 over a major upcoming hard fork.

ADA price could plunge 20% by early August

ADA's price fell 5% intraday to $0.476. The downside move came as a part of a broader retreat that started a day after it briefly climbed above its 50-day exponential moving average (50-day EMA; the red wave in the chart below) near $0.50.

The 50-day EMA has been serving as ADA's curvy resistance level since October 2021. 

Additionally, the upper trendline resistance of a broader descending channel pattern strengthened the selling sentiment around the ADA's 50-day EMA wave. Earlier in June, the same resistance confluence had triggered a 35% price drop toward the channel's lower trendline.

Therefore, ADA's renewed correction move risks leading the price toward $0.384 by July or early August, down about 20% from July 21's price.

Bitcoin (BTC) extended losses on the July 21 Wall Street open after a key resistance level failed to hold as new support.

Dollar rises to squeeze risk assets

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dropping to $22,340 on Bitstamp after the opening bell, down 8% from its local top. 

The pair's progress had seen a challenge from Tesla, which revealed that it had sold 75% of its BTC position at a loss. Macro events then added to Bitcoin's woes in the form of fresh U.S. dollar strength and a surprise rate hike from the European Central Bank (ECB) to combat inflation.

At the time of writing, the U.S. dollar index (DXY) had regained 107, up 0.6% in an hour as U.S. equities conversely saw modest losses. 

In Europe, meanwhile, the ECB decision failed to improve the fortunes of the euro, which gave back early gains as the Eurozone battled fresh political fallout in Italy.

Bitcoin (BTC) extended losses on the July 21 Wall Street open after a key resistance level failed to hold as new support.

Dollar rises to squeeze risk assets

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dropping to $22,340 on Bitstamp after the opening bell, down 8% from its local top. 

The pair's progress had seen a challenge from Tesla, which revealed that it had sold 75% of its BTC position at a loss. Macro events then added to Bitcoin's woes in the form of fresh U.S. dollar strength and a surprise rate hike from the European Central Bank (ECB) to combat inflation.

At the time of writing, the U.S. dollar index (DXY) had regained 107, up 0.6% in an hour as U.S. equities conversely saw modest losses. 

In Europe, meanwhile, the ECB decision failed to improve the fortunes of the euro, which gave back early gains as the Eurozone battled fresh political fallout in Italy.