Crypto markets are volatile as risk sentiment fluctuates

Crypto markets exhibited high volatility on Wednesday as risk sentiment fluctuated. Bitcoin and other major cryptocurrencies rose sharply in early trading but plummeted almost immediately. 

Bitcoin price surged in early trading on Wednesday bouncing off the $26,800 level resistance. Bitcoin price plummeted immediately afterward, dropping to $26,200. If BTC price declines, support can be found near $25,700, while resistance may be encountered near $26,800. 

Ethereum price also soared early on Wednesday, touching the $1,630 level. Ethereum then dropped sharply paring the day’s gains and settling below the $1,600 level. If Ethereum's price declines, it may encounter support near $1,550, while if it increases, resistance may be encountered near $1,630.

Expectations of further economic tightening have dragged risk sentiment down, putting strain on cryptocurrencies. The Fed kept interest rates stable last week, but delivered a hawkish message, raising the odds of future rate hikes. The Fed’s projections showed that interest rates may rise even further this year and are likely to stay in restrictive territory for a longer period, hindering economic growth. Increases in central banks’ interest rates sour risk sentiment, driving risk assets down.

The Securities and Exchange Commission (SEC) has been hesitating in deciding regarding the future of Bitcoin ETFs. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. SEC however has delayed its decision on Bitcoin ETFs putting pressure on Bitcoin price.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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