Crypto markets quiet ahead of Fed meeting

Tuesday was a quiet day for crypto markets, as optimism for China’s reopening was counterbalanced by anticipation for the next Fed rate hike. The US central bank’s next monetary policy meeting is scheduled for next week on the 14th and traders are trying to gauge the Fed’s policy direction.

Market expectations of future rate hikes were considerably trimmed after recent US inflation data showed that inflation is cooling at a faster rate than expected. Reduced rate hike expectations diminish global recession concerns, boosting risk sentiment. Market odds are currently between a 50-bps and a 25-bps interest rate increase in December. Rate hikes are expected to taper off in 2023 as the central bank moves into a stable interest rate.

Bitcoin price remained steady on Tuesday, moving around the $17,000 level with low volatility. If the BTC price declines, support can be found near $16,000, while resistance may be encountered at $17,400. 

Ethereum price also traded with low volatility on Tuesday, keeping close to the $1,250 level. If Ethereum's price declines, it may encounter support at $1,149 and further down at the psychological level of $1,000, while if it increases, resistance may be encountered near $1,350.

Risk sentiment received a boost last week, as China's concerns started to ease. Crypto markets and stock markets edged higher in hopes of China’s economic recovery. After days of protests against the crippling Covid lockdowns, Chinese authorities finally seem ready to relax some of the harsh Covid restrictions. The Chinese government eased some of its strident Covid regulations, abandoning its zero-Covid policy. 

Increased risk aversion sentiment, however, has hit crypto markets hard after the recent collapse of FTX. The FTX token faced liquidity issues, triggering a generalized crypto market sell-off and undermining confidence in the crypto industry.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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