Cryptocurrencies rally reversing early declines

Cryptocurrencies were volatile on Wednesday, declining early in the day but paring their losses later on. Stock markets also dived in early trading but later reversed their losses, propping up cryptocurrencies. Risk sentiment remains uncertain, creating turbulence in stock markets and crypto markets alike. On Wednesday, increased risk sentiment drove the dollar down and boosted riskier assets.

The US Fed raised its interest rate by 75 basis points last week, driving down crypto markets. Steep rate hikes increase global recession concerns, putting pressure on risk assets, such as cryptocurrencies. The Fed’s rate hike was largely expected and had already been priced in by markets. Cryptocurrencies have been retreating for the past couple of weeks in expectations of a hawkish Fed outcome and so the effect of the rate hike was somewhat muted. The EU, the UK, Switzerland, and Canada have also tightened their monetary policies recently. 

Bitcoin climbed to the $19,600 level on Wednesday, after dropping as low as $18,500. If BTC declines further, support can be found at $17,600, while resistance may be encountered near $19,700. 

Ethereum price also seesawed on Wednesday, dropping to$1,260 but climbing to the $1,350 level later in the day. If Ethereum's price declines, it may encounter support at the psychological level of $1,000. If Ethereum's price increases, resistance may be encountered near $1,407.

Ethereum price had been boosted in anticipation of the merge from the Proof-of-Work to the Proof-of-Stake method. The hype created around the merger had created a bullish sentiment for the cryptocurrency, which deflated following its completion, triggering a selloff.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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