Crypto markets supported by rising US stocks

Crypto markets climbed on Wednesday, supported by rising US stocks and especially certain tech stocks. Crypto markets have been following the overall trends of stock markets, which have been pushed down by rising dollar and US bond yields. US markets rose a little on Wednesday though, boosted by positive Microsoft earning reports. 

Cryptocurrency prices are expected to remain volatile this week, as continued risk-aversion sentiment may drive their prices down. Bitcoin traded below the key $40,000 level on Wednesday. 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 price also rose on Wednesday, trading below the $2,900. 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. Continued Russian hostilities against Ukraine have increased risk-aversion sentiment, putting pressure on crypto markets. The situation between Russia and Ukraine continues to escalate, as Russian President Vladimir Putin makes thinly veiled threats about using nuclear weapons, while he cuts off the gas supply to Poland and Bulgaria. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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