Bitcoin and other cryptocurrencies came under pressure last week, following the Fed’s hawkish announcement. The expected reduction in economic stimulus turned investors away from high-risk assets and most major cryptocurrencies plundered. Most investors now believe that the Fed is on a fast track to return to a pre-pandemic monetary policy. Rising inflation rates in the US raise speculation that the US Central bank will raise its interest rates sooner than anticipated, resulting in possibly four rate hikes within 2021.
Bitcoin and Ethereum suffered a bearish week at the beginning of the year, with Bitcoin dropping to $40,500 on Friday and ETH to $3,000. On Monday, the downtrend continued, with BTC going below the $40,000 level for the first time since September. Ethereum did not fare any better, crashing to $2,925.
Currently, BTC is trading above the $40,000 support level and ETH a little above $3,000, while the outlook for both Bitcoin and Ethereum is bullish. If the downtrend is reversed, BTC price may find resistance at the $47,500 level and ETH at the 3,884 level.
Today, traders should pay special attention to scheduled speeches by FOMC members Loretta Mester and Esther George, as well as Fed Chair Jerome Powel’s testimony before the Senate Banking Committee. Fed members’ speeches are likely to affect cryptos, as they provide hints on the Central Bank’s monetary policy and hawkish comments may cause cryptocurrency prices to drop even further.
BTC/USD 1h Chart
ETH/USD 1h Chart
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