Crypto markets seesaw amid stock market volatility

Bitcoin price seesawed on Tuesday, rising from $101,200 to $103,200 in early trading, but plunging to 100,800 later in the day. If BTC price declines, support can be found at $97,100, while resistance may be encountered at $106,970. 

Ethereum price followed a similar pattern on Tuesday, dropping from $3,070 to $3,200 early in the day then paring gains and dropping back to $3,070. If Ethereum's price declines, it may encounter support near $2,900, 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 in the week and continued to decline on Monday. 

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 cut interest rates by 25 basis points at its latest meeting to a target range of 4.25% to 4.50%. Indications that the Fed will follow a more hawkish approach than previously anticipated are putting pressure on crypto markets. 

Markets this week will focus on the Fed’s rate decision on the 29th. The central bank is widely expected to keep interest steady this week and market odds of a rate cut are practically nil. Odds of another rate cut before summer are low and traders will focus on the Fed’s forward guidance to predict the timeline for future rate cuts.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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