Bitcoin price continued to gain strength on Thursday, rising above $105,000. If BTC price declines, support can be found at $97,100, while resistance may be encountered at $106,970.
Ethereum price also gained strength on Thursday, rising from $3,130 to $3,250. If Ethereum's price declines, it may encounter support near $3,000, while if it increases, resistance may be encountered near $3,420.
Bitcoin price registered a new all-time high of $109,880 early last week but dipped later and has been under pressure by increased risk aversion sentiment.
Stock markets plummeted on Monday over the emergence of a new Chinese AI technology. Reports of the launch of a low-cost AI technology that is superior to that of ChatGPT caused tech stocks to plummet, sending shock waves to crypto markets. DeepSeek, a Chinese tech startup, caused a stir in markets by releasing a low-cost AI tool that seems on par with the most sophisticated AI tools developed by US companies. Stock markets crashed on Monday, giving rise to a risk-aversion sentiment that drove crypto markets down.
Trump’s proposed plans for building a Bitcoin strategic reserve have been boosting Bitcoin price. Donald Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy are boosting crypto markets.
On the other hand, uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, which puts pressure on crypto markets. Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries.
On Tuesday, newly appointed US Treasury Secretary Scott Bessent proposed tariffs on all US imports, which would start at 2.5% and could be gradually increased. Trump, however, stated that he wants more aggressive tariffs, saying that he will apply tariffs to chips, pharmaceuticals, steel, and copper. Trump’s comments triggered a risk aversion sentiment putting pressure on cryptocurrencies.
Cryptocurrency prices are also affected by central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting, which was concluded on Wednesday, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations.
The Fed’s latest monetary policy statement did not include an earlier mention that US inflation is moving towards the central bank’s 2% target. Instead, the report stated that price pressures remain elevated, leading to a prolonged pause in rate cuts. The Fed’s statement highlighted that the US labor market remains robust and that the economy is expanding satisfactorily.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration. Market odds of another rate cut before summer dropped after Powell’s speech, with markets pricing in a rate cut in June at the earliest.
Even though high interest rates put pressure on crypto markets, the Fed’s cautious stance boosted risk assets this week. Powell’s speech made it clear that the Fed intends to proceed slowly with future rate cuts, creating a stable economic environment that raises risk sentiment.
BTC/USD 1h Chart
ETH/USD 1h Chart
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