Bitcoin rises above key $44,000 level

Crypto markets have gained strength over the past few weeks in anticipation of the approval of crypto spot exchange-traded funds (ETF). Approval expectations of spot ETFs by the Securities and Exchange Commission (SEC) are boosting crypto markets. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge. 

Crypto markets collapsed on Wednesday though, on rumors that the SEC will reject all ETF proposals in January. A report by crypto financial services company Martixport released on Wednesday hinted that all ETF applications will be denied in January and the process will be moved down the line to the second quarter of the year. The report disappointed traders’ expectations of ETF approvals in January, triggering a crypto selloff. Crypto markets rallied on Thursday on renewed hopes of ETF approvals ahead of the SEC decision expected later in the month.

Bitcoin regained the key $44,000 level, touching $44,500. If BTC price declines, support can be found near $41,600, while resistance may be encountered near $46,000. 

Ethereum price also rallied on Thursday, rising to $2,280. If Ethereum's price declines, it may encounter support near $2,180, while if it increases, resistance may be encountered near $2,430.

Crypto markets are under pressure by rising geopolitical tensions. The war between Israel and Hamas is threatening to spill over the Middle East as tensions rise in the Red Sea area. Iran-backed Houthi militants have been attacking commercial vessels in the Red Sea. Concerns that the Geopolitical crisis in the Gaza area may spread to neighboring countries drive risk sentiment down putting pressure on risk assets. 

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. The Fed kept interest rates unchanged at its December meeting, within a target range of 5.25% to 5.50%. The Fed’s forward guidance was more dovish than expected, hinting that the central bank is preparing to pivot to a less restrictive monetary policy. Markets are currently pricing in a 25 bp rate cut in March with over 70% probability, propping up risk assets.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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