Crypto markets volatile after US GDP data

Bitcoin price rallied in early trading on Thursday but then pared gains dropping below the $69,000 level. If BTC price declines, support can be found at $66,400, while further resistance may be encountered at $70,600. 

Ethereum price also edged higher early on Thursday then dropped below $3,800. If Ethereum's price declines, it may encounter support at $3,570, while if it increases, resistance may be encountered near $4,000.

Signs that US economic growth is slowing down put pressure on crypto markets on Thursday. Preliminary GDP data released on Thursday showed that the US economy expanded by just 1.3% in the first quarter of the year falling considerably below the 3.4% expansion in Q4 of 2023.

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

Odds of a rate cut in September have dropped below 50% as Fed policymakers have expressed disappointment in the progress of disinflation in the US. Fed officials have stressed that more evidence of cooling inflation is required before a policy change can be considered.

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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