Crypto rally halted on uncertain risk sentiment

Crypto markets’ rally was halted on Thursday and most major cryptocurrencies pared Wednesday’s gains. A bearish trend prevailed on Thursday as risk sentiment remained uncertain. 

Bitcoin price dipped on Thursday, dropping below the key $36,000 level. If the BTC price declines, support can be found near $34,500, while resistance may be encountered near $38,000. 

Ethereum price dropped below the key $2,000 level on Thursday, touching $1,980. If Ethereum's price declines, it may encounter support near $1,880, while if it increases, resistance may be encountered near $2,140.

Cryptocurrencies are propped up by expectations that the Securities and Exchange Commission (SEC) will shortly grant spot Bitcoin exchange-traded funds (ETF) applications. BlackRock and other institutions have applied for a Bitcoin ETF, bringing more institutional and retail money into crypto markets. The SEC has been hesitant regarding the future of Bitcoin ETFs, but it seems that the first batch of Bitcoin ETF applications will gain approval within the next few days and reportedly by November 17th. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge.

Increases in central banks’ interest rates are putting pressure on risk assets. Most major central banks, however, are hitting pause on rate hikes, propping up crypto markets. FOMC members have voted to keep interest rates unchanged at a 22-year high within a target range of 5.25% to 5.50%. The Fed’s decision to pause rate hikes has increased risk appetite, boosting cryptocurrencies, especially since markets anticipate that the Fed has reached its rate ceiling. 

The Fed’s hawkish stance over the past year has been paying off and US price pressures are cooling. Inflation in the US eased more than expected in October, driving down rate hike expectations and boosting risk appetite. Inflation in the US surprised on the downside, as headline inflation rose by 3.2% year-on-year in October from 3.7% in September, against expectations of a 3.3% print. US PPI data released on Wednesday confirmed that price pressures in the US are easing. Monthly PPI shrank by a whopping 0.5% in October, falling below expectations of a 0.1% growth. Core PPI, which excludes food and energy, remained stable, against expectations of a 0.2% growth.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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