Cryptocurrencies crash on hawkish Fed

Cryptocurrency prices plummeted on Wednesday, as a result of a hawkish outcome of the much-anticipated Fed policy meeting. Stock markets also crumbled following the Fed’s decision to drag down cryptocurrency prices, which tend to follow stock market trends. 

Steep rate hikes increase global recession concerns, putting pressure on risk assets, such as cryptocurrencies. The US Fed raised its interest rate by 75 basis points on Wednesday to combat soaring US inflation rates. Federal Reserve Chair Jerome Powel, in a hawkish speech after the FOMC meeting, raised expectations for future rate hikes. Powel stated that the Fed is determined to curb inflation, even at the expense of economic growth, pointing to more rate hikes. 

Bitcoin price fell below $18,500 on Wednesday. If BTC declines further, support can be found at the $17,600 level, while resistance may be encountered near $20,500. 

Ethereum price dropped to the $1,240 level on Wednesday. If Ethereum's price declines, it may encounter support at the psychological level of $1,000. If Ethereum's price increases, resistance may be encountered near $1,640.

The long-anticipated Merge was completed last week, but Ethereum's price crashed after the merge. The Merge from the Proof-of-Work to the Proof-of-Stake method is a significant network upgrade that is expected to lead to an increase in demand for Ethereum. It is also a more environmentally-friendly consensus model, limiting drastically the energy consumption and carbon footprint of Ethereum.

Ethereum's price had been boosted in anticipation of the merger for months. The hype created around the merger had created a bullish sentiment for the cryptocurrency, which deflated following its completion, triggering a selloff.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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