Crypto markets dip as risk sentiment sours

Bitcoin price dipped on Tuesday, dropping from $86,000 to $83,000. If BTC price declines, support can be found at $78,300, while resistance may be encountered at $86,100. 

Ethereum price also edged lower on Tuesday, dropping from $1,620 to $1,580. If the Ethereum price declines, it may encounter support near $1,470, while if it increases, it may encounter resistance near $1,700.

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, promoting a risk-averse sentiment that puts pressure on crypto markets. 

High taxes are likely to worsen the global economic outlook, promoting a risk-averse sentiment and putting pressure on cryptocurrencies. Last week, Trump announced that he would pause tariffs for 90 days, against all countries, except China. Crypto markets rallied briefly after Trump’s announcement but resumed their descent on Tuesday as investor confidence remains low.

The situation between the US and China is continuously escalating, however, with both countries announcing heavier tariffs against each other every day, putting pressure on risk assets. The US raised tariffs on China to 145% and China retaliated by increasing tariffs on US products to 125%.

Trump has announced the creation of a national Bitcoin reserve, stressing his determination to make the US the crypto capital of the world. The US government will cease selling Bitcoin and will stockpile it instead as a store of value. Reports that US President Donald Trump is preparing to launch a new stablecoin owned by his family boosted crypto markets this week.

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve kept interest rates unchanged at its policy meeting in March. FOMC policymakers voted unanimously to maintain the federal funds rate at a target range of 4.25% to 4.50%. Markets are pricing in two more rate cuts this year, with the first rate cut in June, while a third rate cut is also considered possible.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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