Cryptocurrencies supported by renewed risk sentiment

The crypto market was supported by renewed risk sentiment on Monday, as optimism prevailed on the looming US debt ceiling.

Risk sentiment fluctuates, causing volatility in risk assets. Mounting economic concerns put pressure on risk assets. The ongoing debate around the US debt ceiling is causing economic uncertainty, pushing cryptocurrency prices down. US Treasury Secretary Janet Yellen has warned that the office would not meet all US government obligations by June 1. Last week, however, US President Biden stated that he is confident that he, and House Speaker McCarthy, will agree on the budget. Talks between the two officials were resumed on Monday and US President Biden stated that he is optimistic that they will make some progress. Growing debt ceiling optimism improved risk sentiment on Monday, providing support for cryptocurrencies.

Bitcoin gained strength on Monday, climbing to the $27,000 level. If the BTC price declines, support can be found near $26,400, while resistance may be encountered near $27,500. Reports that Tether, the largest asset-backed stablecoin, would invest up to 15% of its net profit into Bitcoin every month boosted Bitcoin. 

Ethereum price also rose on Monday, touching the $1,820 level. If Ethereum price declines, it may encounter support near $1,740; if it increases, resistance may be encountered at $1,850.

Signs that major central banks are starting to wind down their hiking cycles provide support for risk assets. The Federal Reserve raised interest rates by 25 basis points at its latest monetary policy meeting, bringing the benchmark interest rate to a 16-year high target range of 5.00% to 5.25%. The US Central Bank has signaled that its hawkish policy is coming to an end, boosting risk assets. US Federal Reserve Chair Jerome Powell indicated on Friday that the US Central Bank may pivot towards a more dovish direction.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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