Bitcoin price deflates as bears fight back

Most major cryptocurrencies have been on a bullish trend for the past couple of weeks. Bitcoin has crossed major resistance levels, as bulls are prevailing, reaching its highest level since December 2021. 

Bitcoin price deflated on Wednesday, dropping below the key $52,000 level, after touching the $53,000 level on Tuesday. Bitcoin price soared on Tuesday but could not maintain a bullish trend as bears fought back, pushing BTC price below $52,000 once more. If the BTC price declines, support can be found at $50,600, while further resistance may be encountered near $52,000 again and further up near $53,000. 

Ethereum price was volatile on Wednesday, touching $3,000 and then dropping below $2,900.  If Ethereum's price declines, it may encounter support near $2,700, while if it increases, resistance may be encountered near $3,030.

Bitcoin is gaining strength as the Bitcoin halving event is approaching. Every halving event cuts the rate at which new bitcoins are released into circulation in half, increasing the scarcity value of Bitcoin. The halving is scheduled approximately every four years, and the next Bitcoin halving event is expected on April 17th raising the value of the cryptocurrency.

The approval of Bitcoin spot exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) caused cryptocurrency prices to surge over the past few weeks. The SEC finally approved 11 applications boosting Bitcoin price. 

Cryptocurrency prices are affected by central banks’ interest rates. High-interest rates are putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The Fed kept interest rates unchanged at its latest meeting, within a target range of 5.25% to 5.50%. The Fed, however, has removed the tightening bias from its policy statement, indicating that the central bank is preparing to pivot to a less restrictive monetary policy. 

Markets are under pressure by increased risk-aversion sentiment caused by rising geopolitical tensions. Concerns that the Geopolitical crisis in the Gaza area may spread to neighboring countries drive risk sentiment down putting pressure on risk assets. The US and the UK have launched a coordinated action against Houthi rebels in Yemen. Over the weekend, an Israeli war cabinet member warned that unless Hamas freed all hostages held in Gaza by the start of Ramadan on March 10th, Israel would invade Gaza's city of Rafah.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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