Cryptocurrencies struggle to hold onto their gains on hawkish Fed

Expectations of additional monetary tightening put pressure on cryptocurrency prices on Thursday. Fed Chair Jerome Powell delivered his much-anticipated testimony about the Semi-Annual Monetary Policy Report this week before the House Financial Services Committee. His testimony came in two parts and was delivered on Wednesday and Thursday. Powell’s speech on Wednesday had hawkish undertones, pointing to further rate hikes up ahead. Powell stated that inflation still has a long way to go, increasing the odds of another rate hike in July’s meeting. Powell resumed his testimony on Thursday along the same lines, stressing the need to bring US inflation down. Power said on Thursday that a strong majority of FOMC members feel that interest rates should go up further and hinted at the possibility of two more rate hikes. Risk sentiment sank as Fed showed signs of maintaining its hawkish stance.

Crypto markets surged earlier this week on reports that large financial services institutions have announced major crypto initiatives. BlackRock, the largest asset manager in the world applied what would be the first-ever spot bitcoin ETF in the U.S. In addition, Crypto exchange EDX Markets, which is backed by Citadel, Fidelity, and Schwab, launched operations on Tuesday. Renewed interest in the crypto industry has helped to offset the negative news from Binance and Coinbase and has fuelled a cryptocurrency rally this week.

Bitcoin price fluctuated around the $30,000 level, struggling to maintain this key level. If the BTC price declines, support can be found near $24,800, while resistance may be encountered near $31,000. 

Ethereum price was volatile on Thursday, rising above $1,930 in early trading but dipping to $1,870 later in the day. If Ethereum's price declines, it may encounter support near $1,630, while if it increases, resistance may be encountered near $1,940.

The U.S. Federal Reserve kept its interest rate steady last week to a target range of 5.00% to 5.25%. The Fed signaled, however, that its tightening cycle is not over yet and that its peak rate might be higher than anticipated. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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