Dovish Fed boosts cryptocurrency prices

Cryptocurrency prices remained strong on Wednesday. Economic uncertainty is causing volatility in stock markets and crypto markets. Risk sentiment soured on Monday after the collapse of the First Republic Bank, pushing cryptocurrency prices down. On Tuesday, the stock prices of two more banks plunged. 

The recent banking crisis has undermined trust in the banking system, raising the appeal of investing in less conventional assets, such as cryptocurrencies. Many investors have turned towards cryptocurrencies fearing a globalised meltdown in the banking system. However, renewal concerns about a banking sector meltdown have caused turbulence in crypto markets. 

In addition, in a letter to the US Congress, US Treasury Secretary Janet Yellen warned that the office would not meet all US government obligations by June 1. Fears of a US debt default are mounting, but crypto markets have benefitted, at least temporarily, from the resulting market turmoil.

Increased rate hike expectations put pressure on cryptocurrency prices. The Federal Reserve raised interest rates by 25 basis points at its monetary policy meeting on Wednesday, bringing the benchmark interest rate to a 16-year high target range of 5.00% to 5.25%. The FOMC statement released after the 2-day meeting was dovish, however, boosting risk assets. The US Central Bank has signaled that its hawkish policy is coming to an end, as prolonged tightening is putting the economy at risk and the recent turmoil in the banking sector has increased recession concerns.

Bitcoin price remained strong on Wednesday, touching $28,700. If the BTC price declines, support can be found near $27,000, while resistance may be encountered near $30,000. 

Ethereum price gained strength on Wednesday, climbing to the $1,890 level. If Ethereum's price declines, it may encounter support near $1,780; if it increases, resistance may be encountered at $1,960.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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