Risk appetite sank on Tuesday, pushing cryptocurrencies prices down. Risk sentiment remains unstable, affecting stock markets and crypto markets alike. US stocks dropped sharply after US inflation data showed that price pressures remain high, increasing the odds of another steep Fed rate hike.
The Fed is likely to maintain a hawkish stance to combat persistently high inflation rates. Steep rate hikes increase global recession concerns, putting pressure on risk assets. Markets are currently wavering between a 50-bp and a 75-bp Fed rate hike in September, with odds favoring a 75-bp rate hike after Tuesday’s inflation data.
The dollars ascend has pushed competing assets down, putting pressure on cryptocurrency prices. Bitcoin price plunged below the $20,500 level on Tuesday. If BTC declines further, support can be found at the key $20,000 level, while resistance may be encountered near $23,000.
Ethereum price also plummeted on Tuesday, falling below the $1,600 level. If Ethereum's price declines, it may encounter support near $1,550 and further down at $1,420. If the Ethereum price increases, resistance may be encountered near $1,720.
Ethereum price has been boosted in anticipation of the so-called ‘merge’, which is expected later this week. The Merge from the Proof-of-Work to the Proof-of-Stake method will be a significant network upgrade that is expected to lead to an increase in demand for Ethereum. Ethereum price has been slipping ahead of the merge, however, as markets possibly face jitters over the success of the merge.
BTC/USD 1h Chart
ETH/USD 1h Chart
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