Bitcoin reclaims the $20,000 level as stocks rise

Stock markets rose on Wednesday in the wake of US inflation data. CPI data released on Wednesday showed that US inflation in June hit a 40-year high of 9.1% on an annual basis. Record high inflation rates for June had been already priced in by markets though, and the dollar retreated after the release of the CPI data. Risk on sentiment was renewed on Wednesday, relieving the pressure on stock markets. Cryptocurrency prices also rallied on Wednesday, as crypto markets have been following stock market trends.

Bitcoin price reclaimed the key $20,000 level on Wednesday. If Bitcoin price declines, support may be found at the $19,200 level and further down at the psychological level of $15,000, while resistance may be found near $21,800 and $23,000. 

Ethereum price also rose on Wednesday, climbing above $1,100. If Ethereum price declines, it may encounter support at the $1000 level, representing its lowest price since January 2021 and further down at the psychological level of $500, while resistance may be encountered at $1,280 and higher up at $2.000.

A steep cryptocurrency selloff has been triggered in the past couple of months, as bearish tendencies have prevailed in crypto markets, with mounting layoffs in crypto firms and huge losses in trading volumes. Bitcoin and Ethereum have suffered heavy losses, plummeting to prices that haven’t been seen since the beginning of 2021.

Global recession fears are promoting a risk-aversion sentiment, pushing cryptocurrency prices down. An increasing number of major Central Banks are moving towards a tighter fiscal policy to tame soaring inflation rates, with Fed rhetoric pointing toward a strong rate hike in July. A rate hike of 75 base points is already been priced in by markets, catapulting the dollar to record highs and pushing cryptocurrency prices down. Stalling economic growth combined with fiscal tightening gives rise to fears of recession, promoting a risk-aversion sentiment and putting pressure on cryptocurrencies.

On the other hand, many market participants are seeking opportunities to buy cryptocurrencies at low prices, with expectations that they have reached the bottom. Bitcoin whales are buying the dip for major cryptocurrencies, preventing crypto markets from crashing completely. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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