Crypto markets volatile on uncertain risk sentiment

Crypto markets and stock markets were volatile on Thursday. Upbeat US GDP data increased rate hike expectations, souring risk sentiment. A Santa Claus rally boosted crypto markets, however, ahead of the Christmas holidays. 

Bitcoin price dropped to $16,580 on Thursday, but pared losses later in the day, regaining the $16,800 level. If the BTC price declines, support can be found near $16,700, while resistance may be encountered at $17,400. 

Ethereum price was also volatile, dropping to $1,185, but rallying later in the day and reclaiming the $1,220 level. If Ethereum's price declines, it may encounter support at $1,150, while if it increases, resistance may be encountered near $1,350.

Increased risk aversion sentiment 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, as FTX CEO Sam Bankman-Fried has been arrested and is facing criminal charges. 

Three major Central Banks, the Fed, the ECB, and the BOE all raised interest rates last week, reigniting global recession concerns and driving risk sentiment down. Even though the rate hikes were already priced in by markets, hawkish ECB and Fed rhetoric, point to further interest rate increases ahead.

Risk sentiment, however, is boosted by signs of China’s economic reopening. The Chinese government has eased some of its strident Covid regulations, abandoning its zero-Covid policy. The Chinese economy has suffered from prolonged lockdowns but reports that the government plans to provide support for the economy and raise hopes of economic recovery.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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