Low-risk sentiment puts pressure on crypto markets

Bitcoin price slipped to the $66,000 level on Tuesday but pared some of the day’s losses later and rose to $67,000. If BTC price declines, support can be found at $65,800, while further resistance may be encountered at $72,000. 

Ethereum price plummeted to $3,400 on Tuesday. If Ethereum's price declines, it may encounter support near $3,300, while if it increases, resistance may be encountered near $3,900.

Reduced risk sentiment put pressure on crypto markets on Tuesday ahead of Wednesday’s all-important Fed policy meeting. 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 kept interest rates unchanged at its latest policy meeting within a target range of 5.25% to 5.50%. Fed rate cut odds in September have dropped to 50% putting pressure on risk assets. 

The next Fed rate decision is due on Wednesday, as well as the release of the US inflation report. Markets expect the Fed to keep interest rates steady on Wednesday and traders will pay close attention to the Fed’s dot plot on Wednesday, which is the summary of the central bank’s economic projections.

Crypto markets have also 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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