Crypto markets crash on high-interest rate projections

The Fed’s hawkish message on Wednesday drove cryptocurrency prices down. Expectations of further tightening lowered risk sentiment putting pressure on risk assets. Several major central banks are holding their monetary policy meetings this week and the Fed’s interest rate announcement on Wednesday was the main financial event of the week. 

Increases in central banks’ interest rates sour risk sentiment, driving risk assets down. The Fed kept interest rates stable on Wednesday, but delivered a hawkish message, raising expectations of another rate hike this year. 

Crypto markets plummeted on Thursday as markets pondered the implications of the Fed’s projections. Interest rates may rise even further this year and are likely to stay in restrictive territory for a longer period hindering financial growth.

Bitcoin continued to decline on Thursday, dropping to $26,400. If BTC price declines, support can be found near $26,200, while resistance may be encountered near $28,100. 

Ethereum also plummeted on Thursday, touching the $1,570 level. If Ethereum's price declines, it may encounter support near $1,550, while if it increases, resistance may be encountered near $1,670.

Reports of a $3 billion sell-off by the FTX drove cryptocurrency prices down early last week. The bankrupt FTX exchange is holding $3.4 billion in crypto assets waiting to be liquidated. The impending liquidation of FTX will involve selling the assets in batches of $100-$200 million per week. The company received approval from the Delaware Bankruptcy Court to liquidate its assets last week. After the initial panic faded, however, markets took the news in stride.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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