Ethereum crashes as spot ETF boost fades

Bitcoin price continued to decline on Wednesday, dropping to $65,500. If BTC price declines, support can be found at $63,000, while resistance may be encountered at $69,000. 

Ethereum price crashed on Wednesday as the hype around the launch of ETH spot ETFs on Tuesday faded. Ethereum price plummeted on Wednesday, dropping below $3,360. If Ethereum's price declines, it may encounter support near $3,300, while if it increases, resistance may be encountered near $3,560.

The US Securities and Exchange Commission (SEC) approved Ethereum spot exchange-traded funds (ETFs) on Monday. Spot Ethereum ETFs made their market debut on Tuesday, causing volatility in the price of Ethereum. Spot Ethereum ETFs generated over $1 billion in trading volume on Tuesday, propping up the cryptocurrency. The rally of Ethereum was short-lived. However, a bearish trend prevailed on Wednesday.

Crypto markets were volatile after US President Joe Biden announced his decision to end his re-election campaign on Sunday. Biden endorsed the candidacy of Vice President Kamala Harris for the Democrats. Republican former President Donald Trump, however, remains ahead at polls for winning the US elections in November.

Fluctuating risk sentiment is causing volatility in crypto markets. Cryptocurrency prices are affected by central banks’ interest rates. High interest rates are restricting economic growth putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve kept interest rates unchanged at its latest policy meeting, within a target range of 5.25% to 5.50%, as expected. 

Rate cut expectations in September are currently above 90%, providing support for risk assets. The uncertainty around Fed rate expectations is likely to continue in the coming months causing volatility in crypto markets. 

Crypto markets have been under pressure by the war in Gaza. Fears that the war will spread in the Middle East are promoting a risk aversion sentiment putting pressure on risk assets such as cryptocurrencies. Hopes of a ceasefire deal in Gaza, however, are propping up cryptocurrency prices. Israeli Prime Minister Benjamin Netanyahu signaled on Tuesday that a cease-fire deal may be reached between Israel and Hamas, that would allow hostages to be freed. Such a deal might be considered a first step towards ending the conflict in Gaza, boosting risk assets. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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