Cryptocurrency prices were volatile on Wednesday. On Wednesday, US Consumer Price Index data showed that headline inflation dropped to 4.9% year-on-year in April, decelerating from a 5.0% print in March. US Inflation cooled more than expected in April, as markets were anticipating a 5.0% print. Cryptocurrency prices spiked after the release of the CPI data but plummeted later in the day.
Signs that major central banks are starting to wind down their hiking cycles provide support for risk assets. The Federal Reserve raised interest rates by 25 basis points at its monetary policy meeting last week, bringing the benchmark interest rate to a 16-year high target range of 5.00% to 5.25%. The US Central Bank has signaled that its hawkish policy is coming to an end, boosting risk assets.
Risk sentiment fluctuates, causing volatility in risk assets. The recent banking crisis has undermined trust in the banking system, raising the appeal of investing in less conventional assets, such as cryptocurrencies. Many investors have turned towards cryptocurrencies fearing a globalised meltdown in the banking system. Mounting economic concerns, however, put pressure on risk assets. The ongoing debate around the US debt ceiling is causing economic uncertainty, pushing cryptocurrency prices down.
Bitcoin price was catapulted above $28,200 after the release of the US CPI data but plummeted to $27,400 later in the day. If the BTC price declines, support can be found near $27,000, while resistance may be encountered near $30,000.
Ethereum similarly shot up to the $1,880 level on Wednesday but erased all gains later in the day, dropping to $1,830. If Ethereum's price declines, it may encounter support near $1,800; if it increases, resistance may be encountered at $2,017.
BTC/USD 1h Chart
ETH/USD 1h Chart
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