Bitcoin reaches four-month high on diminished rate hike expectations

Bitcoin and other major cryptocurrencies rebounded in the past couple of weeks on improved risk sentiment. Crypto markets and stock markets surged, as cooling US inflation helped to scale back recession concerns, improving risk sentiment. On Tuesday, strong risk sentiment boosted cryptocurrencies as markets anticipate another soft US inflation print on Wednesday. Total crypto market capitalization is approaching the $1 Trillion mark once again after the recent surge in cryptocurrency prices.

The bitcoin price touched a four-month high on Tuesday reaching $21,400. If the BTC price declines, support can be found near $16,370, while resistance may be encountered at $22,700. 

Ethereum price was stable on Tuesday, touching $1,600. If Ethereum's price declines, it may encounter support near $1,180, while if it increases, resistance may be encountered near $1,670.

US inflation is cooling, which may give the US Federal Reserve some leeway toward scaling back its interest rate increases. US headline inflation dropped to 6.5% year-on-year in December from 7.1% in November. 

Even though inflation rates remain high, cooling price pressures have reduced rate hike expectations, providing support for riskier assets. The Fed and other central banks are starting to scale back their aggressive rate hiking, raising hopes of a reversal in cryptocurrencies’ downfall. 

US PPI inflation indicators scheduled to be released on Wednesday will provide a complete picture of the direction of US inflation and are likely to affect cryptocurrency prices.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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