Bitcoin rises to $70,000 before bears fight back

Bitcoin price was volatile on Monday, rising early in the day on strong demand and then deflating as bears fought back. Bitcoin surged to the key $70,000 level in early trading on Monday but dropped back to $69,000 later in the day. If BTC price declines, support can be found at $66,700, while further resistance may be encountered at $72,000. 

Ethereum price also surged in early trading on Monday, touching $3,850 before paring the day’s gains and dropping back to $3,770. If Ethereum's price declines, it may encounter support at $3,570, while if it increases, resistance may be encountered near $4,000.

Signs that US economic growth is slowing down put pressure on crypto markets on Monday. The US Manufacturing sector is showing signs of contraction according to PMI data released on Monday.

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. Lower-than-expected Core PCE Price Index data last week raised Fed rate cut expectations boosting cryptocurrency prices briefly. Most cryptocurrency prices deflated over the weekend, however, as markets had time to digest the news and readjust their expectations. 

Odds of a rate cut in September have dropped below 50% as Fed policymakers have expressed disappointment in the progress of disinflation in the US. Fed officials have stressed that more evidence of cooling inflation is required before a policy change can be considered.

The US Federal Reserve kept interest rates unchanged at its latest policy meeting within a target range of 5.25% to 5.50%. The Fed’s forward guidance was hawkish, indicating that interest rates will remain at high levels for longer. Odds of rate cuts are becoming more moderate, putting pressure on crypto markets, as policymakers have stated that they do not intend to start reducing interest rates until there is more evidence of disinflation.

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.  

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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