Bitcoin and Ethereum falter after their brief rally to $42,000 and $3,000

Cryptocurrencies give up ground on Monday, after marking a short-term rally over the weekend that left highs for Bitcoin and Ethereum at key resistance levels. Both tokens attacked important targets in their rallies, with Satoshi Nakamoto's creation surpassing $42,000 for the third consecutive day on Sunday, while Ethereum was just shy of $3,000. On Monday, both have given ground to previous resistances, previously supports at $40,000 and $2,800, respectively, (in round prices) before returning to the upside. Total capitalization sits at $1.8 trillion.

"Bitcoin has been on the uptrend since January 22nd," commented Alejandro Zala, country manager at Bitpanda. "The line has been validated on numerous occasions, but has yet to be broken. Technical indicators are mixed and are more or less in a neutral position, indicating that range trading is predominant," he added. The major altcoins have been moving in a similar pattern and are likely waiting for Bitcoin to dictate the direction of the cryptocurrency market.

For now, the quintessential digital currency continues to maintain an up-and-down pattern, that indicates upside momentum is still in play. For most time frames, "technical indicators are neutral. The RSI and MACD technical indicators are near 50 and 0 respectively, values that are considered signals of a neutral trend," the analyst pointed out.

The analyst also noted that for the past seven days, the Fear and Greed index has been showing signs of extreme fear and is now at 25/100, still a fearful market sentiment, but slightly improved from Tuesday's 21/100.

Investors don't seem confident in the market, but selling pressure has eased, leaving room for a hold-oriented approach. "Historically, buying during periods of extreme fear has generated positive returns and better profits than selling in the same market conditions," the Bitpanda analyst explained. "The index is not a perfect indicator of when to buy or sell. Instead, it provides insight into when the Bitcoin price is recognized to be low or high," he clarified.

As for Ethereum, the expert pointed out that it is trying to break its trendline resistance level of around €2,800. In recent days, Ether has been trading sideways and within a triangle pattern on the daily chart. The Ether price has found intermediate support at €2,800, while the downtrend line is forming resistance. If it wants to form a bullish momentum, the price needs to break the trendline resistance.

The Russia-Ukraine war has certainly contributed to the highly bearish sentiment in the cryptocurrency market and the Fed's (Federal Reserve´s) rate hike announcement has added to the bearish sentiment: although investors were expecting worse news, hence the initial bullish acceptance, higher interest rates ended up worsening the overall market sentiment.