Bitcoin loses bullish momentum as risk aversion sentiment prevails

Bitcoin price dipped on Wednesday, struggling to hold on to the $87,000 level. If BTC price declines, support can be found at $83,000, while resistance may be encountered at $88,700. 

Ethereum dipped on Wednesday, dropping from $2,060 to $2,000. If the Ethereum price declines, it may encounter support near $1,930, while if it increases, it may encounter resistance near $2,100.

Bitcoin price rallied on Tuesday, following a rise in broader financial markets. Major US stock markets gained strength on Tuesday, and investor optimism was transferred to crypto markets as well. In addition, reports that US President Donald Trump is preparing to launch a new stablecoin owned by his family, boosted crypto markets. Bitcoin price lost its bullish momentum on Wednesday, however, as a risk aversion sentiment prevailed. 

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. The uncertainty over Trump’s future policies and trade tariffs generates a risk aversion sentiment, putting pressure on crypto markets. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, thus promoting a risk-averse sentiment that puts pressure on crypto markets. Trump’s economic policies are also raising concerns that the US economic growth will slow down. Many analysts are already expressing concerns that the US will enter a recession.

Trump has announced the creation of a national Bitcoin reserve, stressing his determination to make the US the crypto capital of the world. The US government will cease selling Bitcoin and will stockpile it instead as a store of value. 

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve kept interest rates unchanged at its policy meeting in March. FOMC policymakers voted unanimously to maintain the federal funds rate to a target range of 4.25% to 4.50%. Markets are pricing in two more rate cuts this year, with the first rate cut in June, while a third rate cut is also considered possible.

BTC/USD 1h Chart

ETH/USD 1h Chart

TRADE CRYPTO

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article: