Cryptocurrencies rise on renewed risk sentiment

Risk sentiment was renewed on Thursday on hopes of China’s economic recovery, benefitting crypto markets, and stock markets. Chinese authorities finally relaxed some of the harsh Covid restrictions after widespread protests last month. The Chinese government eased some of its strident Covid regulations on Wednesday, abandoning its zero-Covid policy. 

Bitcoin price shot up above the $17,000 level, reaching $17,250. If the BTC price declines, support can be found near $16,000, while resistance may be encountered at $17,400. 

Ethereum price also rose sharply, reaching the $1,280 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.

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.

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. The FTX collapse is likely to cause ripples in the crypto industry for some time, with two US Congress hearings coming up next week.

BTC/USD 1h Chart

ETH/USD 1h Chart

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article: