Crypto markets decline as risk sentiment sours

Crypto markets edged lower on Wednesday, following the decline of stock markets. Tesla and Netflix reported mixed earnings on Wednesday and risk sentiment dropped, putting pressure on cryptocurrencies. 

Bitcoin price weakened slightly on Wednesday, dropping to $29,800, as last week’s bullish run faded. If the BTC price declines, support can be found near $29,600, while resistance may be encountered near $31,820. 

Ethereum price also edged lower on Wednesday, dropping to the $1,890 level. If Ethereum's price declines, it may encounter support near $1,817; if it increases, resistance may be near $2,030.

Cryptocurrencies jumped last week after a US court ruling in favor of Ripple Labs Inc. A US judge ruled on Thursday that Ripple did not violate federal securities law by selling its XRP token on public exchanges. The ruling may provide support for other cryptocurrency firms fighting litigation from the Securities and Exchange Commission. Crypto markets showed signs of recovery but could not maintain bullish momentum.

Signs of cooling US inflation provide support for risk assets, boosting risk sentiment as future rate hike expectations decrease. US inflation slowed more than expected in June, weighing the dollar down and boosting risk assets. The U.S. Federal Reserve kept its interest rate steady at its June policy meeting for the first time in well over a year to a target range of 5.00% to 5.25%. 

The Fed has signaled that its tightening cycle is not over yet, however, and market odds are in favor of another rate hike in July after June’s pause. Even though US inflation cooled to 3% in June, dropping close to the Fed’s 2% goal, most analysts expect another 25-bp rate hike in July. There is, however, doubt on whether the Fed will continue hiking rates after July’s rate increase or whether July’s rate hike will be the last one this year.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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