Bitcoin and Ether stage strong rally amid sentiment shift – where to next?
Bitcoin and Ether have rallied sharply this week, testing resistance levels on renewed ETF inflows, improved positioning and better risk appetite across markets.
Bitcoin and Ether stage strong rally as institutional inflows return and sentiment shifts
Bitcoin (BTC) and Ether (ETH) have staged a strong rally on Wednesday, reversing a period of drifting lower and catching a market that had grown increasingly cautious off guard.
The move has been broad-based, with both assets revisiting near-term resistance levels, triggering a shift in sentiment across the wider cryptocurrency market.
ETF inflows drive renewed demand
A key driver of the rally has been renewed inflows into spot exchange-traded products, pushing BTC around 6% higher and ETH nearly 11% on Wednesday.
After several weeks of mixed and often hesitant participation, both spot Bitcoin exchange-traded funds (ETFs) and newer Ether-linked products recorded a pickup in net inflows alongside a 1.26% rally in the Nasdaq 100.
The return of sustained allocation from institutional channels signalled a shift from tactical trading towards more deliberate positioning. For Bitcoin in particular, consistent ETF demand has reinforced its role as the primary gateway for institutional crypto exposure, while Ether has benefited from spillover flows as investors diversify within large-cap digital assets.
Positioning reset enables cleaner rally
Positioning dynamics have also played an important role. In the weeks leading up to Wednesday’s rally, derivatives data suggested that leverage had been reset, with funding rates moderating and open interest stabilising. This created conditions for a cleaner move higher.
As prices began to push to key technical resistance, short positions were squeezed. In case of a rise above the February resistance bands taking place, stop-loss orders on the upside are likely to be triggered, potentially leading to another swift advance. The resulting cascade of short covering may amplify momentum, accelerating gains in both BTC and ETH beyond what spot buying alone might achieved.
Technical analysis of BTC and ETH
Both Bitcoin and Ether not only managed to hold above their early February lows but rallied to their respective key resistance areas. These cap for now but need to be exceeded on a daily chart closing basis for a medium-term bullish trend reversal to gain traction.
Bitcoin daily candlestick chart
For Bitcoin this resistance area sits at $70,040.75 – $73,757.39, made up of the March-to-October 2024 and the 6-to-16 February highs.
A rise and daily close above the March 2024 peak at $73,757.39 would be expected to push the April 2025 low at $74,441 to the fore. If also exceeded, the March 2025 low at $76,702.93 may be reached as well.
Similarly for Ether, major resistance may be found at $2,095.58 - $2,152.44. It consists of daily highs and lows going back to April 2023.
Ether daily candlestick chart
For Ether to become medium-term bullish it not only needs to hold above its 24 February low at $1803.64 but also rise and close on a daily basis above its 8 February high and February 2025 low at $2149.30 - $2152.44. Such an advance may put the $2,00 region back on the cards.
Macro backdrop improves for risk assets
Macro sentiment has also turned more constructive. Renewed expectations that US Federal Reserve (Fed) monetary policy could ease in July has improved risk appetite across asset classes, provoking a strong rally in recently downbeat software and technology sectors ahead of Wednesday’s after-hours NVIDIA earnings.
While cryptocurrencies remain sensitive to liquidity conditions, the absence of fresh macro shocks this week has allowed investors to re-engage with digital assets.
Bitcoin, often treated as a high-liquidity proxy for crypto exposure, attracted initial inflows, with Ether subsequently outperforming as confidence broadened.
On-chain data supports rally credibility
On-chain indicators have supported the rally’s credibility. Exchange balances for both Bitcoin and Ether have not surged, suggesting that the move higher has not been accompanied by heavy distribution from long-term holders.
In Ether’s case, elevated staking participation continues to limit liquid supply, tightening available inventory during periods of renewed demand. This supply dynamic has helped prices respond more quickly to incremental buying pressure.
Narrative momentum strengthens
Narrative momentum has further strengthened sentiment. For Bitcoin, ongoing institutional adoption themes - including treasury allocations and product integration by asset managers - have provided a structural backdrop that makes rallies easier to sustain when flows return.
For Ether, continued progress around layer-2 adoption, tokenisation initiatives and decentralised finance integrations has reinforced its positioning as the foundational infrastructure layer for on-chain activity.
Bitcoin-Ether correlation patterns
The correlation between Bitcoin and Ether during the rally has been notable. Historically, Bitcoin often leads directional moves, with Ether following and at times outperforming once confidence spreads.
This pattern appears to have re-emerged, with ETH benefiting from improved risk appetite and higher beta characteristics once Bitcoin confirmed strength by rising to its major February resistance area.
Bitcoin/ Ether spread daily candlestick chart
Rally shows controlled momentum
Importantly, the rally has unfolded without signs of extreme overheating. While momentum indicators have strengthened, derivatives markets have not yet returned to excessively stretched funding levels. This suggests that, at least for now, the advance reflects renewed demand rather than unsustainable leverage build-up.
Sustainability questions remain
That said, sustainability will depend on whether inflows remain consistent and whether the February resistance zones can be broken through, plus whether macro conditions continue to provide a supportive backdrop.
A reversal in ETF flows or renewed tightening in liquidity could quickly temper enthusiasm. For now, however, this week’s rally marks a meaningful shift in tone, signalling that both Bitcoin and Ether remain capable of attracting substantial capital when positioning resets and confidence returns.
Summary
In sum, the strength and short-term bullish reversal in Bitcoin and Ether this week reflects a confluence of institutional inflows, cleaner derivatives positioning, technical breakouts and improved risk sentiment.
Whether this marks the beginning of a more sustained uptrend or a powerful relief rally will become clearer in the sessions ahead, but the coordinated surge underscores the continued centrality of these two assets within the digital asset ecosystem.
Remember that cryptocurrencies represent high-risk, speculative investments with extreme volatility and that investors may lose all of their capital.
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