Market Commentary
Market Commentary: Keys
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September 7, 2022

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Bitcoin and ether’s 2017 and 2018 peaks serve as “key levels” for near and mid-term price action, with the “big picture” being a new area of long-term support, if achieved.

Key Takeaways:

  • August “gave back” some of the performance of risk assets after a strong July and bounce from the mid-June lows
  • While much of the bear market’s conversation has been around the depth and duration of the drawdown, a hold of bitcoin’s late 2017 peak and ether’s early 2018 peak would be significant progress in the “big picture” – these remain “key levels” for price action and sentiment into the end of the year
  • Ether’s outperformance versus bitcoin continues, with the ETH/BTC pair reaching new year-to-date highs


While not many wish Summer comes to an end, August’s performance is more desirable to put behind us: following a strong July, traders “gave back” some of the “gains” experienced by risk assets since the mid-June lows.

After gaining +27.1% in July, bitcoin declined -15.2% in August, while ether gained +70.3% in July and gave back 8.7% in August as well.

This negative performance comes as some of the tailwinds experienced in July’s “sign period” (which we coin to illustrate what can occur as the market ‘normalizes’) retraced, causing “the give back” for risk assets, illustrated below:

This performance in August reminds investors how tied risk assets are to the macro environment. In mid-June, a peak in commodity prices and lower inflation expectations led to lower yields, a “fed pivot” narrative, and ultimately a bottom in equities and crypto. Then, in mid-August, a retrace higher in yields and a new “higher for longer” policy expectation had the opposite effect: bitcoin pulled back 17% and ether declined 19%, as equities fell and growth underperformed value.

So, what’s this mean going forward? Well, whether the bottom is in or not, we point to the “sign period” as an example of what can occur should interest rates, the dollar, and Fed expectations act like the environment seen between mid-June and mid-August.

With markets that are likely to remain volatile as participants digest the various ebbs and flows of policy and macro expectations, it’s important to “zoom out” and consider the “big picture.”

Even with this “macro storm” that we’ve written about all year, bitcoin and ether have outperformed major assets over the long-run, with growth and adoption that has taken place despite price weakness:

We discuss the underlying use-cases and the ability for bitcoin and ether to gain adoption despite drawdowns in our most recent research report, titled “Staying Power.”

And “all things considered” bitcoin and ether are trading around their December 2017 and January 2018 highs “after the drawdown.” Progress, not perfection.

We discuss the importance of the $19,000 and $1,400 “key levels” as well as ether’s continued outperformance since the Merge announcement on page two.


While much of the conversation through this bear market has been related to the depth and duration of the drawdown, a “zoom out” illustrates the progress that’s been made over the last five years.

Even “after the drawdown,” bitcoin and ether are trading around their previous December 2017 and January 2018 closing highs. The two also remain much higher than the “previous lows” seen in the 2018 and Covid drawdowns.

In the “big picture”, previous peaks as long-term support over time would be a very big “win for the bulls” in the illustration of progress, not perfection.

Given this significance, ~$19,000 and ~$1,400 respectively serve as “key levels” for price action and sentiment going forward.


Ether has outperformed bitcoin since early July’s announcement of the September 15th Merge date, with the asset’s relative price (illustrated by the ETH/BTC “pair”) reaching year-to-date highs of 0.082.

From the digital asset low on June 18th through Labor Day’s close, ether has rallied 77.0%, while bitcoin has rallied 12.8%.

This decoupling illustrates growing investor interest in “crypto narratives” – this time being Ethereum’s milestone shift to proof-of-stake. Benefits include a 99% reduction in energy use, a ~90% reduction in new issuance, and cash flows in the form of staking rewards. The Merge also brings Ethereum one step closer to greater scalability.

While ether has outperformed, we continue to monitor bitcoin’s performance and it’s potential to “catch up” in the future.

Click here to download full report. As always, please reach out with any questions or comments.

Stay tuned,

Joseph Orsini, CFA, CMT
Vice President of Research

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