Bitcoin plummets after Powell’s comments

Bitcoin plummeted below the key $60,000 on Wednesday after Fed Chair Powell’s comments. If BTC price declines, support can be found at $58,200, while resistance may be encountered at $63,800. 

Ethereum price plunged to $3,250 on Wednesday. If Ethereum's price declines, it may encounter support near $3,200, while if it increases, resistance may be encountered near $3,520.

Cryptocurrency prices are affected by central banks’ interest rates. High interest rates are restricting economic growth putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve kept interest rates unchanged at its latest policy meeting, within a target range of 5.25% to 5.50%, as expected. Odds of a Fed rate cut in September are currently around 70%, while a rate cut by November is fully priced in. 

Fluctuating risk sentiment is causing volatility in crypto markets. Fed Chair Jerome Powell stated on Wednesday that significant progress has been made on disinflation, hinting at a rate cut in September. Powell added that more evidence of disinflation is required before the Fed can shift to a more dovish policy. Powell’s comments drove crypto markets down even though they were widely interpreted as dovish. Crypto markets reacted more strongly to Powell’s statement that the Fed is not ready to cut interest rates yet than to his hints of a rate cut later this year.

Crypto markets have also been under pressure by the war in Gaza. Fears that the war will spread in the Middle East are promoting a risk aversion sentiment putting pressure on risk assets such as cryptocurrencies. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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