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Crypto markets are bearish as FTX fallout continues

Home >  Daily Market Digest >  Crypto markets are bearish as FTX fallout continues

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Written by:
Myrsini Giannouli

13 December 2022
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Increased risk aversion sentiment has hit crypto markets hard after the recent collapse of FTX. The FTX token faced liquidity issues, triggering a generalized crypto market sell-off and undermining confidence in the crypto industry. The FTX collapse is likely to cause ripples in the crypto industry for some time, with two US Congress hearings coming up this week. Most major cryptocurrencies faced heavy losses during the weekend and on Monday, as markets await former FTX CEO Sam Bankman-Fried’s testimony before the House Financial Services Committee on Tuesday. 

Bitcoin dropped to $16,900 on Monday, before paring some of its losses and climbing back above $17,000 later in the day. If the BTC price declines, support can be found near $16,700, while resistance may be encountered at $17,400. 

Ethereum price also plummeted in early trading on Monday, dropping to $1,240 but reclaiming the $1,270 level later in the day. If Ethereum's price declines, it may encounter support at $1,220, while if it increases, resistance may be encountered near $1,350.

Market participants are awaiting the US central bank’s next monetary policy meeting on Wednesday and are trying to gauge the Fed’s policy direction. Market expectations of future rate hikes were considerably trimmed after recent US inflation data showed that inflation is cooling at a faster rate than expected. Reduced rate hike expectations diminish global recession concerns, boosting risk sentiment. Market odds are currently between a 50-bps and a 25-bps interest rate this week.

Risk sentiment is also boosted by signs of China’s economic reopening. The Chinese government eased some of its strident Covid regulations last week, abandoning its zero-Covid policy. On Monday, Chinese authorities relaxed even more of the harsh Covid restrictions. Renewed risk sentiment provides support for risk assets, such as cryptocurrencies. 

BTC/USD 1h Chart

BTCUSD 1hr chart

 

ETH/USD 1h Chart

ETHUSD 1hr chart

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Written by:
Myrsini Giannouli

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