Bitcoin plunges ahead of US inflation data

Bitcoin price plunged from $70,000 to $68,000 on Tuesday. If BTC price declines, support can be found at $66,400, while further resistance may be encountered at $72,000. 

Ethereum price also declined on Tuesday, dropping to $3,830. If Ethereum's price declines, it may encounter support at $3,570; if it increases, resistance may be near $4,080.

Purchasing of spot BTC exchange-traded funds (ETF) has been on the rise boosting crypto markets. In addition, the US Securities and Exchange Commission (SEC) approved several spot Ethereum ETFs last week, boosting Ethereum price.

Cryptocurrency prices are affected by central banks’ interest rates. High interest rates restrict economic growth putting pressure on risk assets, while the promise of rate cuts boosts crypto markets.  Fed rate cut expectations are decreasing, placing pressure on cryptocurrency prices. 

The US Federal Reserve kept interest rates unchanged at its latest policy meeting within a target range of 5.25% to 5.50%. The Fed’s forward guidance was hawkish, indicating that interest rates will remain at high levels for longer. Odds of rate cuts are becoming more moderate, putting pressure on crypto markets, as policymakers have stated that they do not intend to start reducing interest rates until there is more evidence of disinflation.

The US inflation outlook remains in focus this week with the Core PCE Price index due on Friday. This is the Federal Reserve’s preferred inflation gauge and may affect the Fed’s rate outlook and its release is also likely to cause volatility in crypto markets.

Crypto markets have been under pressure by the war in Gaza. Fears that the war will spread in the Middle East are promoting a risk aversion sentiment putting pressure on risk assets such as cryptocurrencies.  

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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