Bitcoin loses bullish momentum

Crypto markets faltered on Wednesday and most major cryptocurrencies could not maintain Wednesday’s bullish momentum. 

Bitcoin struggled to hold on to the key $38,000 level on Wednesday and was unable to find acceptance above that key level, finally dropping to $37,700 later in the day. If BTC price declines, support can be found near $35,600, while further resistance may be encountered near $40,000. 

Ethereum price also dipped on Wednesday, dropping to the $2,020 level. If Ethereum's price declines, it may encounter support near $1,930, while if it increases, resistance may be encountered near $2,130.

Approval expectations of spot exchange-traded funds (ETF) are propping up crypto markets. Last week, the US DOJ accepted a settlement for the charges against Binance, the world's largest crypto exchange, boosting cryptocurrencies. The deal forced Binance to pay a hefty $4.3 billion fine and CEO Changpeng Zhao had to step down. The future of the exchange remains uncertain as huge outflows were recorded on Tuesday. Binance users withdrew approximately $1 Billion following Zhao’s resignation. The settlement of the judicial case against Binance, however, has benefitted crypto markets. The drawn-out case against Binance has been a major stumbling block in crypto spot ETF approvals and its settlement renewed expectations of spot ETF approvals shortly. 

Cryptocurrencies are propped up by expectations that the Securities and Exchange Commission (SEC) will shortly grant spot Bitcoin ETF applications. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. The SEC has been hesitant regarding the future of Bitcoin ETFs, delaying the decision possibly until January. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge.

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. FOMC members have voted to keep interest rates unchanged at a 22-year high within a target range of 5.25% to 5.50%. The Fed’s decision to pause rate hikes has increased risk appetite, boosting cryptocurrencies, especially since markets anticipate that the Fed has reached its rate ceiling. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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