Santa Claus rally boosts Cryptocurrencies

A Santa Claus rally boosted crypto markets on Tuesday, as most major cryptocurrency prices rebounded with the Christmas holidays drawing near. Stock markets and crypto markets were also buoyed on Tuesday by the BOJ’s surprising decision to raise the cap on benchmark 10-year government bond yields. Markets are still digesting last week’s news, however, putting a lid on cryptocurrency prices, with Sam Bankman-Fried’s indictment followed by a rapid succession of Central Bank rate hikes. 

The bitcoin price rose on Tuesday, touching $16,900. If the BTC price declines, further support can be found near $16,700, while resistance may be encountered at $17,400. 

Ethereum price also edged higher, climbing above $1,200. If Ethereum's price declines, it may encounter support at $1,150, while if it increases, resistance may be encountered near $1,350.

Increased risk aversion sentiment has hit crypto markets hard after the recent collapse of FTX. The FTX token faced liquidity issues, triggering a generalized crypto market sell-off and undermining confidence in the crypto industry. The FTX collapse is likely to cause ripples in the crypto industry for some time, as FTX CEO Sam Bankman-Fried was arrested last week in the Bahamas and is facing criminal charges. 

Three major Central Banks, the Fed, the ECB, and the BOE all raised interest rates last week, reigniting global recession concerns and driving risk sentiment down. Even though the rate hikes were already priced in by markets, hawkish ECB and Fed rhetoric, point to further interest rate increases ahead.

Risk sentiment, however, is boosted by signs of China’s economic reopening. The Chinese government has eased some of its strident Covid regulations, abandoning its zero-Covid policy. The Chinese economy has suffered from prolonged lockdowns but reports that the government plans to provide support for the economy and raise hopes of economic recovery.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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