Crypto markets supported by increased risk sentiment

Bitcoin traded in a tight range on Monday, rising to the $84,000 level. If BTC price declines, support can be found at $79,500, while resistance may be encountered at $85,100. 

Ethereum price edged higher on Monday, rising from $1,890 to $2,020. If Ethereum's price declines, it may encounter support near $1,760, while if it increases, it may encounter resistance near $2,000.

Bitcoin price registered a new all-time high of $109,135 in January but has since been under pressure by increased risk aversion sentiment. Expectations of a crypto-friendly US policy are providing support for crypto markets even as imminent global trade wars push crypto prices down. Bitcoin lost more than a quarter of its value since Trump’s inauguration marked its all-time high and the crypto market capitalization decreased by almost a trillion in the past month.

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 reserve will be created with Bitcoin already owned by the federal government through seizures due to criminal activities according to a statement by crypto Czar David Sacks. Fron now on, the US government will cease to sell Bitcoin and will stockpile it instead as a store of value. Bitcoin price, however, continued to retreat after Trump’s launch of a US Bitcoin reserve, as global economic concerns have lowered risk appetite. 

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 held interest rates steady at its January meeting, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%. 

Market odds of rate cuts within the year are on the rise, putting pressure on the dollar and US treasury yields. Fed rate cut expectations rose after the release of the US inflation report last week. The Fed, however, is widely expected to keep interest rates steady at this week’s policy meeting on the 19. Markets are currently pricing in three rate cuts in 2025, with the first rate cut in June, compared to just two rate cuts the week before, boosting crypto markets. 

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. The uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, putting pressure on crypto markets. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, thus promoting a risk aversion sentiment that puts pressure on crypto markets. Trump’s economic policies are also raising concerns that the US economic growth will slow down. Many analysts are already expressing concerns that the US will enter a recession.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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