Cryptocurrency rally halted as bears take over

Cryptocurrencies gained strength last week as markets started anticipating the emergence of crypto ETFs. Bitcoin and other major cryptocurrencies rallied as a bullish sentiment prevailed, offsetting global economic concerns. 

Crypto markets were volatile on Monday, starting strong early in the day, but suffering a correction later in the day. Most major cryptocurrencies pared the weekend’s gains as bulls took over market control.

Bitcoin price was volatile on Monday, surging to $28,500 in early trading, then paring most of the weekend’s gains and dropping back to $27,400. If the BTC price declines, support can be found near $26,000, while resistance may be encountered near $28,500. 

Ethereum also gained strength early on Monday, touching the $1,740 level, but fell sharply later in the day, dropping to $1,650. If Ethereum's price declines, it may encounter support near $1,560, while if it increases, resistance may be encountered near $1,740.

The first Ethereum-focused exchange-traded funds were launched on Monday, giving individual investors access to their brokerage accounts to the cryptocurrency. Monday’s launch was underwhelming though with low volumes reported. Asset Management Firm VanEck announced last week that they too are preparing Ethereum futures ETF. The fund will be called VanEck Ethereum Strategy ETF and will invest in standardized, cash-settled ETH futures contracts.

The Securities and Exchange Commission (SEC) has been hesitating in deciding regarding the future of Bitcoin ETFs, however. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. SEC however has delayed its decision on Bitcoin ETFs putting pressure on Bitcoin price.

Expectations of further economic tightening have dragged risk sentiment down, putting strain on cryptocurrencies. The Fed has kept interest rates stable, but delivered a hawkish message, raising the odds of future rate hikes. The Fed’s projections showed that interest rates may rise even further this year and are likely to stay in restrictive territory for a longer period, hindering economic growth. Increases in central banks’ interest rates sour risk sentiment, driving risk assets down.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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