* The recent market recovery has caught most by surprise, mainly because macro conditions have certainly not improved, most notoriously with the latest CPI data at 9.1% year over year much higher than expected.
* Inflation expectations from the market are calming off. This is a major factor contributing to the recent price rally we are experiencing now, as well as the generally oversold situation we were in just two weeks ago.
* BTC continuously holding above $20k and ETH being far from the sub $1,000 mark have been taken as a sign of strength by the market. Both have been performing positively.
* The decoupling mentioned before can be easily spotted if we take a look at the historical correlation of BTC against US equities indexes such as the S&P 500, or Nasdaq 100:
* BTC and ETH were volatile until the 12th of July, when they started their current price rally, preceding a move that equities would follow some days later.
* The strength of the Dollar represented by its index in orange has been perceived lately as an inverse mirror of the crypto market.
* After that, compression started, and BTC and ETH started to perform differently. Interestingly, the correlation between BTC and the Dollar is close to 0.2.
* Regarding Ethereum, everyone wonders if the extraordinary price rally that it is having will continue for longer until the merge date in September.
* For this purpose, we use our on-chain indicator In/Out of the Money Around Price. This indicator covers buckets within 15% of the current price in both directions. By doing so, the IOMAP spots key buying and selling areas that could act as support and resistance levels:
* As can be seen in the chart below, a large chunk of addresses has bought ETH at the current levels (from $1,304 to $1,342). This means that the price is likely to act as a support in that price range since these traders are neither profiting nor losing, so the pressure to sell from them could be negligible.
* Looking forward, the price range of $1,552 to $1,595 is another one where many addresses bought in the past. They have been underwater for a while, and there is the likelihood that they might sell again when the price approaches those levels. For this reason, this range is likely to act as a potential resistance level.