Bitcoin rises above the $40,000 level as the dollar weakens

The bitcoin price rose above the $40,000 level on Wednesday, as the dollar weakened. If Bitcoin price declines, it may find support at $37,500 and $36,000, while resistance may be found near $48,200 and further up at the psychological level of $50,000. Over the weekend, the Luna Foundation Guard (LFG), acquired $173 million in Bitcoin, and on Wednesday, added over $100 million to its reserves.

Ethereum's price has been boosted as the release of a long-awaited software upgrade is drawing near. Ethereum price had been declining over the past couple of days, but rose on Wednesday, climbing above the $3,075 level support. In case its price continues to decline, it may find support near $2,820, while resistance may be encountered near $3,800.

The shift of major central banks towards a more hawkish fiscal policy has been putting pressure on cryptocurrencies. Most major Central Banks are turning towards a tighter policy and a return to pre-pandemic interest rates, driving cryptocurrency prices down. Increasingly hawkish Fed rhetoric in the past couple of weeks is pointing to a steep rate hike at the Fed’s next policy meeting in May, putting pressure on cryptocurrencies. 

This week, record-high inflation data in the US have increased the odds of a 50 base points increase in the Fed’s benchmark interest rate in May. On the other hand, investors are starting to use cryptocurrencies as a hedge against inflation, which could provide a boost to crypto markets, as inflation is expected to peak in the following months.

Reports of renewed Russian attacks against Ukraine have dashed hopes for a diplomatic resolution to the conflict any time soon, putting pressure on risk assets. On Wednesday, hopes for a resolution of the crisis between Russia and Ukraine were diminished, as Russian President Vladimir Putin announced that diplomatic talks with Ukraine are at a dead end. 

New western sanctions on Russia are also reducing demand for risk assets, with both the US and the EU announcing a new round of sanctions, targeting financial institutions, commodities and individuals. 

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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