Crypto markets rally on spot ETF approval hopes

Crypto markets had weakened on Tuesday as regulatory concerns offset spot ETF expectations. The US Department of Justice announced on Tuesday new cryptocurrency enforcement actions. The DOJ announced "significant cryptocurrency enforcement actions", which will be specified at a later date, putting pressure on crypto markets

Crypto markets rallied on Wednesday, shaking off regulatory concerns on renewed spot exchange-traded funds (ETF) approval expectations. A bullish trend prevailed on Wednesday following reports that the US DOJ will accept a settlement for the charges against Binance, the world's largest crypto exchange. The ongoing case against Binance has been a major stumbling block in crypto spot ETF approvals. 

Cryptocurrencies are propped up by expectations that the Securities and Exchange Commission (SEC) will shortly grant spot Bitcoin ETF applications. BlackRock and other institutions have applied for a Bitcoin ETF, which would bring more institutional and retail money into crypto markets. The SEC has been hesitant regarding the future of Bitcoin ETFs, delaying the decision possibly until January. BlackRock has also filed an ETH spot ETF for approval, causing Ethereum prices to surge.

Bitcoin price rallied on Wednesday, climbing above the key $37,000 level, and touching the $37,700 level. If BTC price declines, support can be found near $35,150, while resistance may be encountered near $38,000. 

Ethereum price also surged on Wednesday, touching the $2,080 level. If Ethereum's price declines, it may encounter support near $1,900, while if it increases, resistance may be encountered near $2,090.

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. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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