Cryptocurrencies rally following Fed policy meeting

Cryptocurrency prices were boosted on Wednesday, following the Fed policy meeting. The shift of major central banks towards a more hawkish fiscal policy has been putting pressure on cryptocurrencies over the past few months. Most major Central Banks are turning towards a tighter policy and a return to pre-pandemic interest rates, driving cryptocurrency prices down. 

On Wednesday however, the dollar fell sharply and stock markets rose, following the Fed monetary policy meeting. The Fed raised its benchmark interest rate by 50 base points, its highest rate hike in 22 years. Markets had fully priced in the 50 base point rate hike, however, and were anticipating a steeper rate hike. Fed Chair Jerome Powell though, dashed investors’ expectations by announcing that a 75 bp rate hike was not under consideration in the Fed’s plans. 

The less hawkish than anticipated Fed statement boosted stock markets and cryptocurrencies on Wednesday. Stock markets and especially US stock markets surged following the less hawkish than anticipated Fed statement, with the Dow jumping by 900 points. Most major cryptocurrencies also rallied on Wednesday, as crypto markets have been following the overall trends of stock markets. 

Bitcoin climbed almost to the key $40,000 level on Wednesday. If Bitcoin price declines, it may find support at $36,000, while resistance may be found at $40,000 and further up near $48,200 and at the psychological level of $50,000. 

Ethereum also rose on Wednesday, reaching $2,950. If ETH price declines it may find support at $2,820 and further down at $2,440, while resistance may be encountered near $3,174.

Continued Russian hostilities against Ukraine have increased risk-aversion sentiment, putting pressure on crypto markets. The situation between Russia and Ukraine continues to escalate, as Russian President Vladimir Putin makes threats about using nuclear weapons, while he cuts off the gas supply to Poland and Bulgaria. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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