Risk sentiment sours as Fed signals further rate hikes

A bullish trend had prevailed in the past couple of days and most major cryptocurrency prices were boosted. The Fed’s rate announcement on Wednesday, however, dashed the bulls’ hopes, driving cryptocurrency prices down. Expectations of further tightening soured risk sentiment putting pressure on risk assets.

Bitcoin plummeted after the Fed rate announcement on Wednesday, dropping to $26,800. If BTC price declines, support can be found near $26,200, while resistance may be encountered near $28,100. 

Ethereum suffered heavy losses on Wednesday, touching the $1,610 level. If Ethereum's price declines, it may encounter support near $1,600, while if it increases, resistance may be encountered near $1,700.

Several major central banks are holding their monetary policy meetings this week and the Fed’s interest rate announcement on Wednesday was the first one, followed by the BOE on Thursday and the BOJ on Friday. 

Increases in central banks’ interest rates sour risk sentiment, driving risk assets down. The Fed kept interest rates stable on Wednesday, but delivered a hawkish message, raising expectations of another rate hike this year. 

Reports of a $3 billion sell-off by the FTX drove cryptocurrency prices down early last week. The bankrupt FTX exchange is holding $3.4 billion in crypto assets waiting to be liquidated. The impending liquidation of FTX will involve selling the assets in batches of $100-$200 million per week. The company received approval from the Delaware Bankruptcy Court to liquidate its assets last week. After the initial panic faded, however, markets took the news in stride.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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