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Crypto markets crashed under hawkish Fed expectations

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Written by:
Myrsini Giannouli

27 April 2022
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Most major cryptocurrencies plunged on Tuesday, slammed by sharp Fed rate hike expectations. US stock markets also tumbled on Tuesday, with the Dow dropping 800 points. Crypto markets have been following the overall trends of stock markets, which have been pushed down by rising dollar and US bond yields. Tech markets have been especially low on Tuesday, ahead of Google and Microsoft earning reports. 

Cryptocurrency prices are expected to remain volatile this week, as continued risk-aversion sentiment may drive their prices down. Bitcoin price fell to the $37,600 level on Tuesday. If Bitcoin price declines, it may find support at $37,500 and $36,000, while resistance may be found at $40,000 and further up near $48,200 and at the psychological level of $50,000. 

Ethereum's price also plummeted on Tuesday, dropping below the $3,000 key level, and is currently testing its $2,820 level support. If ETH price continues to decline, it may find further support near $2,440, while resistance may be encountered near $3,550.

The shift of major central banks towards a more hawkish fiscal policy has been putting pressure on cryptocurrencies. Most major Central Banks are turning towards a tighter policy and a return to pre-pandemic interest rates, driving cryptocurrency prices down. Increasingly hawkish Fed rhetoric is pointing to a steep rate hike at the Fed’s next policy meeting in May, putting pressure on cryptocurrencies. 

Record-high inflation data in the US have increased the odds of a 50 base points increase in the Fed’s benchmark interest rate in May. On the other hand, investors are starting to use cryptocurrencies as a hedge against inflation, which could provide a boost to crypto markets, as inflation is expected to peak in the following months.

Continued Russian attacks against Ukraine and failing diplomatic talks between the two countries are promoting a risk-aversion sentiment, putting pressure on risk assets. New western sanctions on Russia are also reducing demand for risk assets, with both the US and the EU announcing a new round of sanctions, targeting financial institutions, commodities and individuals. 

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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