Bitcoin vulnerable to bearish sentiment

Cryptocurrency prices edged lower on Tuesday, as a bearish sentiment prevailed ahead of Wednesday’s Fed meeting. 

Bitcoin price fell below the key $19,200 support level on Tuesday. If BTC declines further, support can be found at the $17,600 level, while resistance may be encountered near $20,500. 

Ethereum price exhibited low volatility on Tuesday, trading around the $1,340 level. If Ethereum price declines, it may encounter support at the psychological level of $1,000. If Ethereum price increases, resistance may be encountered near $1,640.

The long-anticipated Merge was successfully completed on Thursday, but Ethereum price crashed by more than 15% after the merge. Ethereum price had been boosted in anticipation of the so-called ‘merge’ for months. The hype created around the merge had created a bullish sentiment for the cryptocurrency, which deflated following its completion, triggering a selloff.

The Merge from the Proof-of-Work to the Proof-of-Stake method is a significant network upgrade that is expected to lead to an increase in demand for Ethereum. It is also a more-environmentally-friendly consensus model, limiting drastically the energy consumption and carbon footprint of Ethereum.

Steep rate hikes increase global recession concerns, putting pressure on risk assets. This week, all eyes are going to be on the much-anticipated Fed monetary policy meeting on Wednesday, as the Fed is set for another steep rate hike. Market odds are in favour of a 75-bp increase in interest rates, while recently traders have started betting on a 100-bp rate hike. A raise in the US Central Bank’s interest rates has already been priced in by markets, though and may have muted impact on cryptocurrency prices. Cryptocurrencies may even go up in case the Fed’s tone in the Statement and Press Conference following the policy meeting is more dovish than expected. A more aggressive rate hike and a more hawkish Statement though, are likely to set cryptocurrencies tumbling. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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