Crypto markets propped up by renewed risk sentiment

Bitcoin price rose to the $59,000 level after the release of the US inflation report on Thursday, then dropped below $57,000. If BTC price declines, support can be found at $53,300, while resistance may be encountered at $60,000. 

Ethereum gained strength early on Thursday, rising to the $3,200 level but pared gains later in the day. If Ethereum's price declines, it may encounter support near $2,820, while if it increases, resistance may be encountered near $3,300.

Fluctuating risk sentiment is causing volatility in crypto markets. 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. 

Rate cut expectations in September were catapulted above 85% after the release of the US inflation report on Thursday, providing support for risk assets. The uncertainty around Fed rate expectations is likely to continue in the coming months causing volatility in crypto markets. 

Fed chair Jerome Powell testified on the Semi-Annual Monetary Policy Report before the US Senate Banking Committee on Tuesday and Wednesday. Powell stated that inflationary pressures in the US are easing and warned that keeping rates at restrictive levels for too long could weaken the economy, hinting at a rate cut in September. 

Crypto markets have 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. Hopes of a ceasefire deal in Gaza, however, boosted cryptocurrency prices this week.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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