Bitcoin’s rally halted as risk sentiment wavers

Bitcoin price dropped from $72,890 to $69,800 on Thursday as risk sentiment began to decline. If the BTC price declines, support can be found at $65,000, while resistance may be encountered at the all-time high of $73,600. 

Ethereum price dipped from $2,660 to $2,510 on Thursday. If Ethereum's price declines, it may encounter support near $2,400, while if it increases, resistance may be encountered near $2,800.

Fluctuating risk sentiment is causing volatility in crypto markets. Concerns of a broadening conflict in the Middle East are promoting a risk aversion sentiment, lowering the appeal of high-risk assets such as cryptocurrencies. The conflict between Israel and Hamas continues to escalate, putting pressure on risk assets such as cryptocurrencies. 

In the past few weeks, markets had been bracing for Israel’s retaliatory attack against Iran. Israel’s attack over the weekend, however, did not inflict substantial damage. The Iranian government announced that there would be an appropriate response to Israel’s attack, but Iran’s President emphasized that they do not seek a war with Israel. On Thursday, however, a report stating that Iran plans an attack against Israel in the coming days from Iraqi soil, put pressure on crypto markets. In addition, Israel’s attacks in Gaza and Lebanon have continued unabated this week, causing risk sentiment to waver. 

The US elections on November 5th are attracting considerable market attention. Crypto markets have been gaining strength on rising expectations that Donald Trump will win the Presidential elections. Trump’s odds of winning the elections are rising in the polls, with new polls showing that Trump and Harris are neck-in-neck. Trump’s proposed tariffs and tax policies will support economic growth, boosting high-risk assets such as cryptocurrencies. In addition, Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Bitcoin price rose above $73,000 this week, coming close to its all-time high reached in March. 

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. The US Federal Reserve performed a drastic rate cut of 50 basis points in September, bringing its interest rate down to a target range of 4.75% to 5.00%. Market odds of a 25-bp rate cut in November are currently approximately 90%.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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