Cryptocurrency prices fall as risk appetite declines

Stock markets and crypto markets fell heavily after the Federal Reserve performed another steep rate hike on Wednesday. As central banks raise their interest rates, moving towards an increasingly hawkish fiscal policy, recession fears grow, pushing risk appetite down. Stock markets and crypto markets have been experiencing a roller coaster ride, with prices seesawing, as risk sentiment turns from positive to negative almost daily. 

The US Federal Reserve hiked its interest rate by 75 basis points at its monetary policy meeting on Wednesday. The Fed has so far increased interest rates by a total of 375 basis points this year, bringing its benchmark interest rate to 4.0%. Wednesday’s rate hike of 75 bps was in line with expectations, however, and had already been priced in by markets. 

The FOMC Statement issued by the Fed following the policy meeting raised some doubts on whether the US central bank was already considering a pivot in its monetary policy. Fed Chair Jerome Powell however, re-affirmed the Fed’s commitment to bringing inflation down. Market expectations are currently in favor of a 50-bps rate hike in December and a 25-bps hike in January. Rate hikes are expected to taper off in 2023 as the central bank moves into a stable interest rate.

Bitcoin continued trading above the key $20,000 level on Wednesday but dropped from $20,500 to approximately $20,100. If BTC declines, support can be found at the psychological level of $20,000 and further down at $19,000, while resistance may be encountered near $21,000 and higher up at $21,800. 

Ethereum price dropped from $1,600 to almost $1,500 on Wednesday. If Ethereum's price declines, it may encounter support at $1,480 and further down at $1,320, while if it increases, resistance may be encountered near $1,660 and further up at $1,780.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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