Bitcoin rebounds as bulls take over

Crypto markets collapsed on Monday but started to rally on Tuesday as crypto bulls wrestled back control from the bears. It remains to be seen, however, if this recovery will only be temporary. Crypto markets have been declining over the past year and recent events have undermined investors’ trust in the industry. 

Reports of a $3 billion sell-off by the FTX drove cryptocurrency prices down on Monday. The bankrupt FTX exchange is holding $3.4 billion in crypto assets waiting to be liquidated. The impending liquidation of FTX will involve selling the assets in batches of $100-$200 million per week. The company’s liquidation plan is awaiting a court hearing from the Delaware Bankruptcy Court on September 13.

Bitcoin price was volatile on Tuesday, rising to $26,500 after Monday’s slump. If BTC price declines, support can be found near $24,900, while resistance may be encountered near $26,500. 

Ethereum price also recovered Monday’s losses on Tuesday, with the cryptocurrency climbing back to $1,620. If Ethereum's price declines, it may encounter support near $1,530, while if it increases, resistance may be encountered near $1,660.

Crypto markets were volatile last week on renewed rumors on Bitcoin ETFs. Reports of an imminent BlackRock ETF boosted Bitcoin price last week. Recent developments on the highly anticipated Bitcoin spot exchange-traded fund (ETF) applications have been causing ripples in crypto markets. Bitcoin spot ETFs would provide investors with easier access to the asset and direct exposure to changes in the cash market. The Securities and Exchange Commission (SEC), however, has rejected a proposal from Grayscale to convert its Bitcoin Trust into a spot Bitcoin ETF. SEC has announced a delay in making any decisions on the issue until October, driving cryptocurrencies down. 

Increases in central banks’ interest rates sour risk sentiment, driving risk assets down. The U.S. Federal Reserve raised interest rates by 25 basis points in July to a target range of 5.25% to 5.50%, the highest level in 22 years. Most investors are anticipating a pause in rate hikes, but the US central bank has signaled that further tightening is possible if inflation does not go down consistently. US inflation data this week on the 13th and the 14th may play a decisive role in future Fed rate decisions and are likely to affect crypto markets.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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