Bear markets prevailed on Tuesday ahead of the Fed policy meeting on Wednesday. Recession fears, combined with increased Fed rate hike expectations, caused high market volatility. Global stock markets slipped, dragging cryptocurrency prices down. Crypto markets have been known to follow the overall trends of stock markets and especially of tech stocks. The dollar index climbed above 105.4 on Tuesday, ahead of Wednesday’s Fed monetary policy meeting. This marks its highest price yet this year and represents a 20-year high.
Market sentiment has been fragile during the past couple of weeks, causing volatility in stock markets and cryptocurrencies alike. A strong risk-off sentiment has prevailed since the beginning of the year due to geopolitical tensions, driving investors to safer assets and dampening the appeal of cryptocurrencies. As however, the crisis drags on, and risk sentiment is slowly returning to markets.
Bitcoin price broke through the $26,700 level support on Monday and fell below $21,000 on Tuesday. If Bitcoin price declines, support may be found further down near $19,200, while resistance may be found near $32,300 and at $40,000.
Ethereum price also fell heavily this week, trading below the $1,500 psychological level support and reaching below $1,200 on Tuesday. If the Ethereum price declines, further support may be found at the psychological level of $1,000, while resistance may be encountered at $2,000 and higher up at $2.170.
The shift of major central banks towards a more hawkish fiscal policy has been putting pressure on cryptocurrencies over the past few months. Most major Central Banks are turning towards a tighter policy and a return to pre-pandemic interest rates, driving cryptocurrency prices down.
This week, the US Federal Reserve is expected to raise its benchmark interest rate by at least 50 base points and the BOE by 25 bp. Cryptocurrency prices are falling ahead of the Fed meeting, as the expectation of a tighter US fiscal policy boosts the dollar, decreasing the appeal of competing assets. The Fed and BOE rate hikes have been already priced in, however, and a more dovish than expected outcome may provide a much-needed boost to crypto markets.
BTC/USD 1h Chart
ETH/USD 1h Chart
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