Crypto markets rally as bulls prevail

Bitcoin price surged on Wednesday, touching the $43,500 level, and flirting once more with the key $44,000 level. If BTC price declines, support can be found near $41,600, while resistance may be encountered near $45,000. 

Ethereum price skyrocketed on Wednesday, rising to the $2,370 level. If Ethereum's price declines, it may encounter support near $2,180, while if it increases, resistance may be encountered near $2,400.

Crypto markets were under pressure earlier this week by rising geopolitical tensions. The war between Israel and Hamas is threatening to spill over the Middle East as tensions rise in the Red Sea area. Iran-backed Houthi militants attacked commercial vessels in the Red Sea again on Tuesday. A risk aversion sentiment prevailed on Tuesday on concerns that the Geopolitical crisis in the Gaza area may spread to neighboring countries and risk assets sink. Crypto markets rallied on Wednesday, however, as a bullish trend prevailed.

Crypto markets have gained strength in anticipation of the approval of crypto spot exchange-traded funds (ETF). Approval expectations of spot ETFs by the Securities and Exchange Commission (SEC) are boosting crypto markets. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. The SEC has been hesitant regarding the future of Bitcoin ETFs, delaying the decision. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge. Reports that a date has been set for Bitcoin spot ETF approval in January are driving Bitcoin price up. 

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. The Fed kept interest rates unchanged at its December meeting, within a target range of 5.25% to 5.50%. The Fed’s forward guidance was more dovish than expected, hinting that the central bank is preparing to pivot to a less restrictive monetary policy. Markets are currently pricing in a 25 bp rate cut in March with over 70% probability, propping up risk assets.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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