Cryptocurrencies volatile as risk sentiment remains uncertain

Bitcoin price plummeted in early trading on Tuesday, dropping below $93,500, but quickly bounced back, regaining the $96,000 mark. If the BTC price declines, support can be found at $90,700, while resistance may be encountered at the psychological level of $100,000. 

Ethereum price was also volatile on Tuesday, dropping sharply to $3,500 early, but reclaiming the $3,600 level later in the day. If Ethereum's price declines, it may encounter support near $3,450, while if it increases, resistance may be encountered near $3,800.

Bitcoin has been flirting with the key $100,000 level in the past two weeks. Geopolitical concerns are promoting a risk aversion sentiment, however, lowering the appeal of high-risk assets such as cryptocurrencies. A 60-day ceasefire between Israel and Lebanon was officially declared last week. Reports, however, that Israel has been repeatedly violating the ceasefire, reduced risk sentiment this week. Israel threatened to attack the Lebanese state if its truce with Hezbollah collapses on Tuesday, reigniting geopolitical concerns. Meanwhile, a civil war has broken out in Syria, further destabilizing the region.

Crypto markets have been gaining strength since Donald Trump’s victory in the US Presidential elections. Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy have been boosting crypto markets, especially since Donald Trump announced plans to accumulate a national Bitcoin stockpile. 

Concerns over Trump’s proposed tariffs, however, dampened risk sentiment on Monday. Trump stated on social media over the weekend that BRICS nations would face 100% tariffs if they created a new currency to replace the dollar. BRICS is an intergovernmental organization comprising nine countries – Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. Trump’s threats raised concerns that the incoming US President is going to start multiple trade wars, boosting the dollar and putting pressure on gold prices. Trump also stated last week that his administration will impose an additional 25% tariff on imports from Canada and Mexico, with an additional 10% to the 60% already announced during his election campaign on Chinese goods. 

Cryptocurrency prices are also 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. Market odds of a December rate cut rose to 75% on Tuesday, propping up cryptocurrencies. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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