Crypto markets are unstable as risk sentiment fluctuates

Crypto markets were unstable on Thursday, with most major cryptocurrencies registering losses early in the day but rallying later on. Risk sentiment sank on Wednesday, even as the Fed announced a pause in rate hikes. Risk assets started to recover on Thursday, however, as markets had time to digest the Fed policy meeting outcome.

The U.S. Federal Reserve kept its interest rate steady at its policy meeting on Wednesday for the first time in well over a year. Fed officials have voted to keep the central bank’s interest rate at a target range of 5.00% to 5.25%. The Fed signaled on Wednesday, however, that its tightening cycle is not over yet and that its peak rate might be higher than anticipated. The FOMC policy statement following the conclusion of the meeting was hawkish, hinting at further rate hikes. Expectations of additional monetary tightening drove risk sentiment down, pushing cryptocurrency prices down. 

The ECB raised interest rates by 25bps on Thursday and delivered a hawkish message. The ECB rate hike was anticipated, however, and was largely priced in by markets. The outcome of the BOJ policy meeting on Friday may also affect risk assets.

Bitcoin price plummeted to the $24,800 level early on Thursday but recovered later in the day, rising to $25,500. If the BTC price declines, support can be found near $24,000, while resistance may be encountered near $26,800. 

Ethereum price followed a similar trajectory on Thursday, dipping to the $1,630 level in early trading but paring losses later in the day, climbing to $1,660. If Ethereum's price declines, it may encounter support near $1,600, while if it increases, resistance may be encountered near $1,860.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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