Cryptocurrency rally short-lived after US debt deal

Cryptocurrency prices surged over the weekend and early on Monday after the announcement of a deal on the US debt issue. Risk sentiment was briefly renewed, boosting crypto markets. The rally was short-lived hover, and most cryptocurrency prices deflated later on Monday. Risk sentiment fluctuates, causing volatility in risk assets, such as cryptocurrencies. 

The ongoing debate around the US debt ceiling is causing economic uncertainty, inducing volatility in cryptocurrency prices. Increasing US debt fears have been driving risk sentiment down, putting pressure on cryptocurrencies. 

US President Joe Biden and Republican House Speaker Kevin McCarthy announced over the weekend that they have reached a tentative agreement to suspend the federal government's debt ceiling. The deal, however, will have to pass through Congress before the US runs out of resources to meet its obligations.

The bitcoin price rose to $28,300 early on Monday but retreated later in the day, dropping to the $27,600 level. If the BTC price declines, support can be found near $26,000, while resistance may be encountered near $29,000. Reports that Tether, the largest asset-backed stablecoin, would invest up to 15% of its net profit into Bitcoin every month boosted Bitcoin. 

Ethereum price skyrocketed to the $1,920 level in early trading on Monday but dropped to $1,880 later in the day. If Ethereum's price declines, it may encounter support near $1,740, while if it increases, resistance may be encountered at $2,000.

Signs that major central banks are starting to wind down their hiking cycles provide support for risk assets. The Federal Reserve raised interest rates by 25 basis points at its latest monetary policy meeting, bringing the benchmark interest rate to a 16-year high target range of 5.00% to 5.25%. The US Central Bank has signaled that its hawkish policy is coming to an end, boosting risk assets. 

BTC/USD 1h Chart

ETH/USD 1h Chart

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article: